Bloomberg News reports that crypto traders are becoming increasingly bearish on BNB tokens. It serves as a centerpiece of Binance’s digital asset trading platform, which is currently embattled.
Trader sentiment
The negative sentiment shows its impact on the perpetual swap market, a kind of futures contract used in the crypto market with no expiry date. They do not expire. As per information provided by Coinglass, there is an open interest-weighted funding rate found negative on the weekend. This means that observers are ready to pay for the ones recording gains to keep open on BNB.
As revealed by Darius Tabatabai, the co-founder of the Vertex Protocol, the decentralized exchange, if the funding rates are negative, they indicate heavy short positioning. In such a scenario, traders bet on a drop in the price of BNB. As of now, headlines are more or less neutral, but it will be exciting to watch how the entire thing pans out.
Bloomberg News reports that there have been constant crackdowns on Binance spanning Australia, Europe, and the United States. It is becoming a drag on the largest crypto exchange’s business proceedings. The heightened security has caused some banking partners to drop Binance. This has led to imposing a limit on the ability of the clients to deposit and withdraw fiat money on this exchange.
What experts say?
The chief investment officer, Shiliang Tang, associated with LedgerPrime, a crypto investment company, revealed that trade is only a short-term bet. This is because the speculators have to pay a steep fee to keep the positions open. Not only that, it leads to the contribution of a negative funding rate. It is a need for arbitragers to keep the long positions on BNB in the perpetual swap market.
Tang also observed that there was no real way in which the spot on BNB could be borrowed. It implies that it is not easy to short BNB on the spot market due to the absence of liquidity. In the last few days, the open interest on perpetual swaps on BNB surged to $460 million.
BNB, the 5th biggest cryptocurrency as far as market value is concerned, dropped by 1% registering at $243 in New York as of 1:23 pm. This year, this token shows little change compared to an index of the biggest 100 coins, which shows to rally around 50%, as per data compiled by Bloomberg.
BNB as a token
BNB is the native token for both Binance and Binance-initiated BNB Chain blockchain. During recent times when there was a lot of turmoil, the funding rate of BNB was negative. These instances include when US Securities and Exchange Commission filed a lawsuit against Binance Holdings Ltd, Binance, US and Chanpeng CZ Zhao in June. Zhao is the founder and owns exchanges. However, Zhao and the other companies have disputed allegations by the SEC.
