In the perpetually fickle futures market attached to the BNB token, bearish views seem to be gaining strength. The cryptocurrency finds itself grappling with multiple challenges. Recent data from Coinglass indicated that open interest and volume-weighted funding rates in perpetual futures plummeted to an all-time low of -0.18% since late April. This suggests that shorts, those betting on a price drop, are in the driver’s seat and are willing to finance longs to keep their pessimistic gambles alive. “BNB is being heavily shorted,” commented Huff Haus, co-founder of Pear Protocol, pinpointing the deeply negative funding rates as an indicator.
An aura of pessimism engulfs the BNB token, compounded by recent high-profile departures, irregularities surrounding BCH withdrawals from Binance.US, and a looming Department of Justice case against Binance’s CEO Changpeng “CZ” Zhao. The token is directly linked with the fortunes of Binance, which is currently mired in regulatory scrutiny worldwide.
Binance, having reportedly laid off more than 1,000 employees recently, found itself at the center of an uproar earlier this month when three senior officials stepped down, criticizing CZ’s response to the DOJ investigation for potential money laundering allegations. CZ himself tried to mitigate the escalating unease, referring to the firings as involuntary terminals and debunked the layoff figures quoted by the media as FUD (fear, uncertainty, doubt).
Murmurings of trepidation are, nonetheless, pervasive in the market, as underscored by the plummeting funding rates. Some market spectators are speculating more unsavory news is on the horizon, possibly exacerbated by deliberations surrounding the recent US legal decision in favor of Ripple, and how it may bear impact on Binance’s ongoing skirmishes with the US. Securities and Exchange Commission (SEC).
Previously, in the long-awaited verdict in the SEC’s lawsuit against Ripple Labs for purported securities law violations through XRP sales, the District Court for the Southern District of New York decided that XRP will not be classified as a security when offered to individuals via centralized exchanges. It clarified that the regulation only applies to offers to institutional investors. In June, the SEC indicted Binance and Coinbase for offering unregistered securities on their platforms.
For a short squeeze to transpire, needing an unusually high bearish activity, a slight upturn can cause bears or short sellers to even out their stances, inducing further price rises. Market participant, Skew, suggests a move above $265 could induce some short covering while also warning that BNB looks weak as long as price trades below $265. At the time of this article’s conclusion, BNB was trading at $242, according to CoinDesk data.
Source: Coindesk
