- June 16, 2023
- Posted by: [email protected]
- Category:
On June 7, the price of BNB, Binance’s native cryptocurrency, fell roughly 7.3%, going below $275 and reaching its lowest level in three weeks. The downward pressure on BNB stems from two consecutive pieces of bad news. Firstly, a recent exposé by Reuters alleged that Binance had laundered “at least $2.35 billion in illicit funds.” Secondly, Binance, the parent company of BNB, is facing allegations of violating securities rules and laundering billions of dollars for criminals. These factors could potentially lead to an additional 25% to 40% drop in BNB’s price in 2022.
BNB was originally issued as part of an initial coin offering (ICO) in 2017, which raised $15 million for Binance. While primarily serving as a utility asset within the Binance ecosystem by offering trading discounts, BNB also functions as a speculative financial asset, making it the fifth-largest cryptocurrency by market capitalization. The U.S. Securities and Exchange Commission (SEC) is currently investigating whether the 2017 ICO of BNB tokens should have been registered as securities, potentially putting further downward pressure on BNB’s price. Since its peak in May 2021 at around $700, BNB has already lost more than half of its value.
The decline in BNB’s price coincided with a broader correction trend in the crypto market, as both Bitcoin and Ethereum experienced drops of 7% and 7.25%, respectively, on the same day. BNB’s current position is testing the 61.8% Fibonacci retracement level near $274, which previously acted as a significant support level during the May-July 2021 session before a substantial price rally. However, weak fundamentals, including the Federal Reserve’s hawkish policy, increase the likelihood of BNB dropping below the 61.8% Fib line.
If BNB breaches the 61.8% Fib level, the next downside target could be the 200-week exponential moving average (EMA) near $200, representing a further 25% decline from the June 7 price. The weekly relative strength index (RSI) for the BNB/USD pair, currently at 34, indicates potential further drops until reaching the oversold level of 30, which suggests a buying sentiment. A significant drop below the 200-week EMA could see BNB seeking support around the 0.786 Fib line near $160, indicating a potential 40% decline from the June 7 price.
Conversely, if BNB manages to hold above $274, it could rebound towards the area defined by its 0.5 Fib line around $355 and its 50-week EMA near $380, offering a potential increase of over 20% from the current price level.
The overall decline in the cryptocurrency market can also be attributed to the Federal Reserve’s decision to pause interest rates, which has led to concerns about a higher terminal rate later in the year. As a result, digital assets, including Bitcoin and other cryptocurrencies, are vulnerable as higher borrowing costs make less risky assets more attractive to investors.
Other cryptocurrencies, including Ethereum, Cardano, and Dogecoin, suffered significant trade losses in addition to BNB. As legal scrutiny and economic considerations impact the cryptocurrency space, the market remains unpredictable.
