Binance BNB Token Futures Open Interest Jumps to 5-Month High

Updated: 12 June 2023

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The world of cryptocurrencies is witnessing a significant development as open interest in Binance Coin (BNB) token futures reaches a five-month high. This surge in open interest signals a surge in trading activity and investor interest in the BNB ecosystem.

#BREAKING: Open interest in @binance‘s $BNB token futures jumps to 5-month high#VOC #VoiceOfCrypto #BullMarket #CryptoNews

— Voice of Crypto (@VoiceofCrypto2) June 12, 2023

The rise in open interest comes alongside a price decline, highlighting the prevailing bearish sentiment in the market.

BNB Suffers as Regulator Clampdown on Binance Exchange Continues

Notably, Binance currently faces regulatory challenges and negative funding rates in the perpetual futures market. While this happens, the cryptocurrency community closely monitors the implications for BNB and its associated projects.

BNB’s surge in open interest suggests increased market participation and a growing bearish sentiment among traders. As the price declines and regulatory pressures mount, Binance and its associated projects face a challenging period ahead.

Open interest in Binance’s BNB token futures has surged, reaching its highest level in five months. This increase indicates a significant uptick in trading activity associated with the native asset of the Binance ecosystem. Nevertheless, the rise in open interest shows a disparity with BNB price. This points to a growing influx of bearish short positions and reflects a shift in sentiment among investors.

The negative funding rates imply that bearish shorts are willing to pay bullish longs. This helps them maintain their price-negative bets in the market.

According to Coinglass data, the total open interest in BNB futures reached 1.57 million BNB ($360 million) on Monday. This marks the highest level since January 1. Within the past 24 hours, open interest has surged by over 8%, with an impressive weekly increase of nearly 27%.

Meanwhile, the market price of BNB experienced a notable dip, falling to $221 on June 12. With this, Binance Coin is approaching the low point recorded on December 12. The decline of over 25% can be attributed to the recent lawsuit filed against Binance by the U.S. Securities and Exchange Commission (SEC). This has added to the mounting pressure due to the bear market that continues to weigh on cryptocurrencies.

Venus Protocol Raises Concerns

The significant short positions in BNB suggest on-chain liquidations that can be attributed to the Venus Protocol. Venus Protocol, an algorithm-based money market system built on the BNB Chain, has raised concerns, potentially triggering a cascade of liquidations. Based on recent reports, the BNB Chain hacker’s position is on the verge of liquidation on Venus Protocol, which could result in significant price drops.

BNB Chain hacker’s position is on the verge of liquidation on Venus Protocol, can result in sharp price drop https://t.co/YcDDgFCpbh

— WhyBitcoinPrice (@whybitcoinprice) June 12, 2023

To address market concerns, the Venus Protocol team took to Twitter to assure investors. Based on their assertions, the BNBChain core team would intervene and assume control of the BNB position on Venus. This would happen if the cryptocurrency hits the liquidation threshold. The preventive measure aims to mitigate potential adverse effects by preventing a sudden influx of BNB tokens into the market.

Given the surge in open interest and the bearish sentiment surrounding BNB, investors should exercise caution. Binance and its associated projects face significant challenges in rebuilding market confidence amid regulatory pressures and ongoing market uncertainties.

BNB Price Forecast As Binance Coin Edges Towards New All-Time Low

At the time of writing, the BNB price is $232.1, a daily drop of almost 2%. The Binance Coin is edging towards a new all-time low, moving past the lowest price of $220 recorded on December 17. An increase in selling pressure beyond this level could spell doom for the altcoin.

Notably, the Relative Strength Index (RSI) position at 16 indicated a lack of momentum in BNB price as investors shy away from the Binance Coin ecosystem. Notably, this is worse than what was witnessed in the FTT token when the FTX empire crumbled.

The drop in Binance Coin price is reinforced by growing overhead pressure, indicated by the position of the Simple Moving Averages (SMA) above the price. Notably, the 50-day SMA at $305.9 had signaled a call to sell BNB, when it crossed below the 200-day SMA at $311.0 on June 8. Clearly, traders heeded this call, evidenced by the cascade of price slumps that have seen the altcoin shed up to 20% with signs of a continued downtrend.