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It’s a rough time to be an altcoin. Insecurity reigns. A slew of altcoins - a catch-all for most cryptocurrencies except bitcoin and ether - have been harpooned in lawsuits filed by US regulators against exchanges Binance and Coinbase last week, hammering the prices of the tokens.

It’s big. Over 50 cryptocurrencies worth over $100 billion in total and making up about 10% of the overall market, are now viewed by the SEC watchdog as securities, according to CCData.

Among major players, for example, solana, polygon and cardano have sunk between 23% and 32%. “Security classifications would affect all US crypto exchanges, leading to a forced closing of various altcoin pairs,” said Vetle Lunde, senior analyst at K33 Research.

Whether US courts accept the SEC’s classification remains to be seen, but the impacts are already being felt - Robinhood Markets has already said it will remove solana, cardano and polygon from its platform.

Market participants say other exchanges may follow suit. That would make it more expensive both for individual tokens to operate and for crypto exchanges to list them.

“Securities can only be traded by brokers, and only on regulated exchanges, and only with clearing houses and transfer agents and physical certificates,” Ryan Rasmussen, analyst at Bitwise Asset Management told the Reuters Global Markets Forum. “It would certainly be a hurdle for exchanges to implement.”

The SEC’s classification is likely to hit investment interest for the blockchains underlying tokens like solana and cardano, both notable chains for developing decentralized finance and other applications, market players say.

“It could fundamentally hinder their ability to gain funding from the U.S,” said Lucas Kiely, chief investment officer of digital investment platform Yield App, adding this would likely impact the onboarding of developers and users.

The Cardano Foundation and Solana Foundation told Reuters they disagreed with the SEC’s classification of their tokens as a security under US law but looked forward to working with regulators to gain further clarity. Polygon Labs declined to comment.

Quiet on the bitcoin front

Crypto’s big guns were surprisingly resilient. Bitcoin and ether weren’t named in the SEC’s lawsuit, nor were stablecoins such as tether and USC Coin.

Bitcoin and ether are still down about 4.5% and 8% respectively since the first SEC lawsuit was filed a week ago, though, indicating investors are still jittery about crypto.

“The SEC has not said that BTC, ETH, or stablecoins generally are unregistered securities, and those assets account for at least 75% of crypto’s total market cap,” said Alex Thorn, Head of Firmwide Research at Galaxy Digital.

Many investors also tend to turn to bitcoin in times of uncertainty, considering it a relatively safe haven among crypto assets, and this time is no different.

Bitcoin’s share of the cryptocurrency market rising to 47.6% from 45% prior to the lawsuits, according to data tracker CoinMarketCap.com. Crypto-focused economist Noelle Acheson said market data was indicating long-term bitcoin holders were in sitting tight.

Among bitcoin traders, those that have held the coin for under five months were most active in last week’s trading, accounting for 76.4% of deposit volume, according to analytics firm Glassnode.

By contrast, bitcoin investors who have held their coins for more than five months appeared relatively calm and accounted for just 1.9% of deposit volume.

And it may not be all doom and gloom for beleaguered altcoins, according to some market watchers who say their price declines could be attracting investors hunting value.

Investment products tracking altcoins have seen positive - albeit small - net inflows this year, in contrast to bitcoin and ether, Coinshares data showed on Monday.

“Altcoins … represent assets who remain in the much earlier stages of development compared to bitcoin, with investors willing to give them the benefit of doubt, holding on their investment, hoping they will come to fruition,” said CoinShares analyst James Butterfield.

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