The crypto market is in bullish mood as Bitcoin (BTC) and Dogecoin (DOGE) deliver gains

Crypto markets edged higher on Wednesday as traders shrugged off the regulatory woes of Binance and Coinbase (COIN), two of the largest crypto exchanges by trading volume, indicating bullish strength for major tokens.

Bitcoin (BTC) and Dogecoin (DOGE) are up 5% over the past 24 hours, leading gains among the majors. Litecoin (LTC), XRP and Shiba Inu (SHIB) are up as much as 4%, while the total crypto market cap is up 3.3% to $1.12 trillion.

The rebound reversed losses for traders impacted by a record liquidation event on Monday that saw over $293 million worth of token-tracked futures products liquidated.

A liquidation occurs when an exchange forcibly closes a trader’s leveraged position due to a partial or total loss of initial margin. This happens when a trader is unable to meet the margin requirements for a leveraged position (does not have sufficient funds to keep the trade open).

Large liquidations can signal the local top or bottom of a steep price move, potentially allowing traders to position themselves accordingly.

The reversal came as traders likely shrugged off the long-term implications of regulatory issues for influential exchanges in the US and viewed some tokens as securities. A security is a tradable financial instrument that represents financial value, usually in the form of a stock, bond or option.

In separate filings Monday and Tuesday, the U.S. Securities and Exchange Commission accused Binance and Coinbase of selling unlicensed securities in the country. The charges came despite the lack of regulatory clarity from the SEC on whether crypto tokens can be considered securities. The SEC has not given official legal definitions to token issuers and has yet to respond to a petition from Coinbase calling for clear definitions for setting rules.

BNB coin (BNB), Solana’s SOL, Cardano’s ADA and Polygon’s MATIC, tokens that were considered securities in several filings earlier this week, also recouped losses but ultimately traded at a discount of 3 % traded compared to Tuesday.

As such, some market watchers are suggesting that the crypto majors, referred to as securities in SEC filings, could see turmoil in the near term.

“We’ve seen a bloodbath for altcoins. This is most likely because the SEC lawsuits designate a basket of altcoins as securities but do not place bitcoin and ether in the same class,” said Jeff Mei, COO of crypto exchange BTSE, in an emailed statement. “And in general, crypto traders seem to be fleeing to the relative safety of the top cryptos by market cap.”

“It is possible that we will continue to see this split in crypto markets, with blue-chip bitcoin and ether leading the way, but the majority of altcoins remaining insecure,” Mei added.

Some say the filings have bolstered Bitcoin’s value proposition, as the largest cryptocurrency has not been specifically designated as a security by the SEC, alongside second-largest cryptocurrency Ether (ETH).

“The fact that the SEC did not mention Bitcoin anywhere in its filings against Binance and Coinbase also underscores the SEC’s previously expressed position that Bitcoin is not a security and therefore falls outside the agency’s purview,” shared Alex Adelman, CEO of the Bitcoin rewards app Lolli, featuring , in a statement to CoinDesk.

“The agency’s enforcement actions against select tokens as unregistered securities may continue to work in Bitcoin’s favor as investors increasingly shift their capital to Bitcoin as an inherently safe, sound, and independent store of value,” Adelman said.

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