Cryptocurrency markets saw a major shift on Thursday after a U.S. court ruling complicated the Securities and Exchange Commission’s (SEC) plan to regulate digital assets. Bitcoin’s (BTC) share of the total crypto market, known as its dominance, tanked 2.6% to 50.14%, the biggest one-day decline since June 13, 2020. This shift spurred hopes for a sustained outperformance of alternative cryptocurrencies, often called the alt season.
The District Court for the Southern District of New York ruled that XRP is not a security when offered to individuals through centralized exchanges, but is one when sold directly to institutions. This distinction threw a spanner in SEC’s plan to paint all altcoins with the same brush and subject them to stringent oversight by categorizing them as securities.
Altcoins like XRP, SOL, MATIC and ADA chalked out double-digit gains, outshining bitcoin by a big margin. Decentral Park Capital said in a market update published Thursday, Alt season may be upon us following the Ripple news as indicators collectively suggest risk appetite is funneling down the risk continuum.
Noelle Acheson, author of the Crypto Is Macro Now newsletter, said the ruling could help Coinbase in its legal tussle with the SEC, but cautioned against predicting an outsized altcoin rally. The court also found Ripple violated securities law when selling XRP directly to institutions, injecting further uncertainty into the market.
CoinShares’ head of product, Townsend Lansing, said, It is important to note that institutional investors who purchased directly from Ripple may find themselves subject to class-action litigation as potential underwriters. This is an area to watch closely, especially if big-name venture capitalists were involved.