BNB open interest reaches new highs, indicating a bearish signal.
Binance, a cryptocurrency exchange, has faced increased regulatory scrutiny in recent months. As a result, the value of its native token, BNB, has suffered. Despite the exchange's attempts to regain stability amidst regulatory challenges, BNB remains under significant selling pressure. This is demonstrated by the record-breaking levels of BNB open interest.
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BNB open interest reaches new highs, indicating a bearish signal. BNB Open Interest Reaches New All-Time High
BNB shorts are increasing despite the recovery trend of the crypto market. According to Dylan LeClair, an analyst, the open interest in the digital asset has risen exponentially. LeClair's chart shows that BNB's open interest is now at $400 million, which is over four times higher than the previous all-time high of $50 million in 2020. However, the surge in open interest is currently more bearish than bullish. BNB open interest reaches new highs, indicating a bearish signal.
Hmmm, some interesting flow in $BNB futures: – Perpetual futures open interest is seeing new highs as funding rates have gone deeply negative (-200% APR for next funding period) (Chart #1) – looks as if someone is getting ahead of some bad news flow. – The last time BNB… pic.twitter.com/1B27OkjvPx — Dylan LeClair 🟠 (@DylanLeClair_) July 17, 2023
Despite funding rates moving above negative 200%, traders are still shorting the altcoin, indicating their expectation of a significant crash for the digital asset. This could be due to the United States Department of Justice potentially leveling charges against the crypto exchange, as suggested by LeClair, leading insiders to position themselves accordingly.
Will The Altcoin Survive a DoJ Lawsuit?
The Securities and Exchange Commission's lawsuit against Binance crypto exchange has shown that regulatory lawsuits can negatively affect the price of BNB. In early June, the price of BNB dropped by more than 20% over a few days period after the SEC sued the exchange.
Given such a response, a lawsuit from the DoJ would be even worse because of its implications. And if this were to happen this week, then another 20% decline from here would see the digital asset lose its footing above $200.
For right now, the price of BNB is still holding up nicely above $240. One reason for this could be the Arkham sale being carried out on the Binance launchpad. As this sale requires BNB for subscriptions to participate, it has provided temporary buy pressure for investors to participate. However, once the sale ends on July 18, this temporary plug would be eliminated and the cryptocurrency will likely fall back to the $230 territory.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.