Binance Token Faces Pessimism in Crypto Derivatives Market

Binance Token Faces Pessimism in Crypto Derivatives Market

The Growing Regulatory Turmoil for Binance’s BNB Coin in the Blockchain Industry

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Crypto traders have recently expressed pessimism in the derivatives market for Binance’s native coin BNB due to the growing regulatory turmoil in the blockchain industry. The negative sentiment is reflected in the open interest-weighted funding rate, which turned negative over the weekend, according to Coinglass data. Negative open interest implies that traders who bet on a price decline are willing to pay those who are waiting for gains to keep their bearish positions open.

Binance, the world’s largest crypto exchange in terms of trading volume, has been facing heavy regulatory scrutiny in various regions such as Australia, Europe, and the US. The exchange, along with its CEO Changpeng Zhao, is facing serious accusations from the US Securities Exchange Commission (SEC), including mishandling users’ funds and lying to financial regulators.

Open Interest of BNB Perpetual Swaps Crosses $460 Million

The negative open interest rate in the perpetual swap market reflects traders’ growing pessimism towards Binance’s token. Perpetual swaps are a type of futures contract used in the crypto market that do not expire. Coinglass data shows that the open interest of BNB on perpetual swaps has crossed $460 million.

Shiliang Tang, the chief investment officer at crypto investment firm LedgerPrime, commented on the situation, stating that BNB trades seem like a “very short-term bet” as speculators are paying a steep fee to keep their positions open. He also noted that borrowing spot BNB is challenging, making it difficult to short BNB on the spot market due to a lack of liquidity.

Currently, BNB, the fifth largest cryptocurrency in terms of market cap, is trading slightly above $239, representing a 2% decrease in the last 24 hours. On July 14, BNB briefly surged to $260 when most altcoins rallied after the landmark ruling in the Ripple lawsuit against the SEC.

Source: CoinMarketCap

Binance Continues to Face Regulatory Scrutiny

Last month, the US SEC filed a lawsuit against Binance, accusing the exchange and its CEO of operating an illegal exchange, broker-dealer, and clearing agency in the United States. The financial watchdog also alleged that Binance misrepresented its trading controls.

The lawsuit further claims that Changpeng Zhao and Binance used a network of firms to control Binance.US’s funds. However, Binance has denied all accusations made by the SEC.

The increased regulatory scrutiny initiated by US regulators has led to many banking partners withdrawing their support from Binance due to uncertainty. This limitation has affected the exchange’s ability to deposit and withdraw fiat money.

Binance is not the only exchange facing regulatory heat in the US; Coinbase, the largest US-based exchange, is also embroiled in a legal battle with the SEC. The outcome of this legal battle could have significant implications for the future of the crypto industry in the country.

In conclusion, the blockchain industry is witnessing growing regulatory turmoil, particularly concerning Binance’s BNB coin. The negative open interest rate reflects traders’ pessimism, while the ongoing legal battles and accusations against Binance and its CEO have further escalated the situation. It remains to be seen how these regulatory challenges will shape the future of the crypto industry in various regions, including the United States.