Why Did the SEC Lawsuit Against Coinbase Cause COIN to Drop?

TL;DR

Coinbase sold off because a judge ruled that the SEC could pursue a case over alleged unregistered sales of securities and potentially present it to a jury. The speaker says Coinbase had not lost the lawsuit, but a guilty finding could bring a fine affecting quarterly results. Read on for the speaker’s explanation of the sell-off, recovery attempt, and short-trade outlook.

Transcript

so the SEC just announced that it's going to be investigating coinbase this is why we are seeing a sudden drop on its price point this is actually one of the reasons that I love Weeble because again this aggressive sell-off happens everyone begins to panic but if you see it right on over here this was actually shared on Weeble which it kind of just... Read More

Key Insights

• 😀 The SEC's investigation into Coinbase highlights the regulatory challenges faced by cryptocurrencies and the need for compliance.
• 💦 Coinbase's price drop is a reflection of market sentiment and the potential impact of legal consequences on the company.
• 🎁 Panic selling and overreactions in the market can present opportunities for shorting, but caution is necessary due to market volatility.

Questions & Answers

Q: Why did Coinbase’s price suddenly drop?

The price dropped after news that Coinbase must face a lawsuit from the US securities regulator. The speaker attributes the aggressive sell-off to bad news and panic selling.

Q: Did Coinbase lose the SEC lawsuit?

No, the speaker says Coinbase had not successfully lost the lawsuit. A judge ruled that the SEC could open a case seeking to prove Coinbase engaged in unregistered sales of securities.

Q: What is the SEC alleging against Coinbase?

The case concerns whether Coinbase engaged in unregistered sales of securities. According to the speaker, the allegation could be heard by a jury at trial.

Q: What could happen if Coinbase is found guilty?

The speaker says Coinbase would most likely have to pay a fine. That fine could affect the company’s overall results for the relevant quarter.

Q: Was Coinbase recovering after the sell-off?

The speaker says Coinbase tried to recover after the aggressive sell-off. At the time discussed, it was being rejected by the moving average while showing some signs of progress.

Q: Why was the speaker considering shorting COIN?

The speaker believed the idea of shorting COIN remained possible after the sell-off and attempted recovery. The speaker had opened a short position and planned to add more if the price broke below 260, targeting 255.

Q: How did the speaker trade DJT?

The speaker shorted DJT during a live trading session after it confirmed a lower high. The trade moved back toward previous lows, matching the planned price target.

Q: What does the speaker say about stocks trading sideways?

The speaker says sideways trading indicates a lack of progress. When a position is not making progress, the speaker suggests that traders probably do not want to keep an open position.

Summary & Key Takeaways

• Definition: The Coinbase news involved a judge allowing the SEC to pursue a case over alleged unregistered sales of securities.

• Compare: The ruling allowed a case to proceed, it did not mean Coinbase had already lost the lawsuit.

• Number: DJT was up $72 44 cents at the open before it began selling off.

• Step 1: The speaker waited for DJT to confirm a lower high before opening a short position.

• Step 2: The speaker rode the DJT move back toward previous lows and the planned price target.

• Compare: Coinbase attempted to recover after panic selling but was rejected by the moving average.

• Number: The speaker says the stock can sell off 10, 15, 20, or even 30% in a given day.

• Tool: Weeble shared updates about the Coinbase lawsuit and the related market move.

• Number: Weeble offered up to 12 free shares with an initial deposit of at least five bucks.

• When: The speaker planned another live trading session at market open, when several economic reports were set for release.