Altcoins are suffering. Insecurity rules. Last week, U.S. officials sued Binance and Coinbase (COIN.O), slamming the values of various altcoins, including most cryptocurrencies except bitcoin and ether.

It’s big. According to CCData, the SEC considers 50 cryptocurrencies valued at over $100 billion and 10% of the market securities.
Major players, including Solana, polygon, and Cardano, have fallen 23%–32%.

“Security classifications would affect all U.S. crypto exchanges, forcing various altcoin pairs to close,” said K33 Research senior analyst Vetle Lunde.

Robinhood Markets (HOOD.O) will remove Solana, Cardano, and Polygon from its platform regardless of whether U.S. courts accept the SEC’s classification. Other exchanges may follow.
Tokens would cost more to run for crypto exchanges to list.

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

Market players expect the SEC’s classification to reduce investment in blockchains like Solana and Cardano, which explore decentralized finance and other applications.

“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 that this would likely affect developer and user onboarding.

The Cardano and Solana Foundations told Reuters they disagreed with the SEC’s designation of their tokens as securities under U.S. law but looked forward to working with regulators to clarify. Polygon Labs declined to comment. Crypto’s major weaponry shockingly survived.

The SEC’s lawsuit didn’t cite Bitcoin, ether, tether, and USC Coin.

Bitcoin and ether are still down 4.5% and 8% since the first SEC complaint was filed a week ago, signaling investors are still nervous 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 Galaxy Digital’s Head of Firmwide Research, Alex Thorn.

Bitcoin is also a safe shelter for investors in times of uncertainty. According to CoinMarketCap.com, Bitcoin’s market share rose to 47.6% from 45% before the litigation.

Crypto-focused analyst Noelle Acheson said market data showed long-term bitcoin holders were holding firms.

According to Glassnode, under-5-month bitcoin traders accounted for 76.4% of deposit volume last week. Bitcoin investors who held their coins for over five months were calm and accounted for 1.9% of deposit volume.

Market observers predict cryptocurrencies’ price drops may attract value-seeking investors.

On Monday, Coinshares statistics showed that altcoin investment products had tiny net inflows this year, unlike bitcoin and ether.

“Altcoins…represent assets which 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.