Altcoins including Cardano’s Ada dropped 25 per cent on Saturday, while tokens including Solana’s Sol, Polygon’s Matic and Avalanche’s Avax posted double-digit percentage declines

A steep weekend sell-off in crypto driven by a slide in smaller digital tokens set off a new wave of concern among investors, following a week during which a clampdown by the US Securities and Exchange Commission (SEC) on the crypto space gained considerable pace.

Altcoins including Cardano’s Ada dropped 25 per cent on Saturday, while tokens including Solana’s Sol, Polygon’s Matic and Avalanche’s Avax posted double-digit percentage declines.

Bitcoin, the biggest digital asset, was nearly 3 per cent lower as of 4.15 pm on Saturday in New York. Second-ranked Ether earlier lost over 6 per cent to reach its lowest level since late March.

This time around, investors were already on edge after the SEC filed lawsuits earlier in the week against top crypto exchanges Binance and Coinbase Global, and flagged a number of altcoins as unregistered securities, including Sol, Matic and Ada.

Altcoins have been at the centre stage ever since the SEC labelled some of these tokens as securities in recent lawsuits, said Gordon Grant, co-head of trading at Genesis.

Coming into this weekend, as we got to that witching-hour time, these altcoins suddenly came under fire, he said.

Jitters were worsened by speculation over a rumour that a fund sold its entire holdings of such tokens.

An image was circulated on Twitter showing a fake news article covering the liquidation, though market experts stated there was little basis to believe the news was true.

Further speculation of selling pressure around Robinhood Markets’ decision on Friday to drop specific altcoins from its platform also contributed to the negative sentiment.

Noelle Acheson, former head of market insights at Genesis Global Trading, stated there may be another reason for the price decline, like a bigger holder or fund exiting its positions or an effort to drive prices down to cover shorts.

Early Saturday morning UTC time is not a good time to exit unless you want to really move the price, Acheson stated in her newsletter on Saturday.

Today’s move is not good news, and not just because of the lower prices. It reminds investors how thin the market presently is, and how prices could be influenced, she stated.

A label as an unregistered security could make tokens more difficult to trade if exchanges shun from listing them for fear of annoying the SEC.

Robinhood said on Friday it will drop Solana’s Sol, Cardano’s Ada and Polygon’s Matic from June 27.

Irrespective of whether the physical tokens held by Robinhood have moved or not, the fact that at end of month the tokens will be sold if not moved sets about a very easy trade for folks to pre-position for, Spencer Hallarn, a derivatives trader at GSR, said.

In addition, there has been a general withdrawal of liquidity from the market as folks have cut back, Hallarn said.

The last week’s events featured a significant few days of enforcement actions against the crypto industry in the US.

The SEC accused Binance and its founder Changpeng Zhao of mishandling customer funds, misguiding investors and regulators, and breaching securities rules.

Binance has termed the SEC’s action “disappointing” and stated that it aims to defend its platform “vigorously”.

Coinbase has disputed the SEC’s claim that it is running an illegal exchange and stated it is ready to take the fight all the way to the Supreme Court.

BNB, a crypto asset which can be considered an arbiter of sentiment towards its original creator Binance, dropped over 6 per cent on Saturday to hit the lowest level since last July.