On February 13, BNB (BNB) posted its worst daily performance since November 2022, falling 8.5% below $285. another sell-off remains high. Let’s look at some reasons.
BNB Price Rising Wedge Pattern Breakout
The continued decline in the price of BNB came as part of a broader breakout of a rising wedge pattern.
Most notably, on Feb. 9, BNB broke out of its rising wedge pattern, a bearish reversal setup that forms when price trends higher within a range defined by two converging ascending trend lines.
As a rule of thumb in technical analysis, the take profit target of a rising wedge is measured after subtracting the maximum distance between the pattern’s upper and lower trend line from the breakout point.
Therefore, the rising wedge target for BNB comes in near $250, 15% below current prices. Interestingly, the $250 level also served as support in May, September, and November 2022.
SEC Takes Action Against Binance USD
Selling pressure in the BNB market intensified mainly due to the US Securities and Exchange Commission (SEC) crackdown on the company; Paxos.
The regulator has accused Paxos of issuing and listing Binance USD (BUSD), a native Binance stablecoin, which it considers an unregistered security. Paxos has categorically denied the accusation, saying it would go to court if necessary.
But the markets have turned fearful after this news. For example, the number of addresses holding between 1,000 and 10 million BUSD has dropped dramatically since February 13, shedding more than $207 million worth of stablecoins, according to data from Santiment.
“This is a staggering level of stablecoin decline, especially as the other three stablecoins (Tether, USD Coin, Dai) have been seeing large buildups of forks,” Santiment noted, adding that the ramifications of the SEC lawsuit have been pushing the price of BNB down.
“It is also posting a one-month high trading volume while its price has fallen, which means there is a greater chance that the nosedive will continue.”
FUD event? Fish, whales, sharks pour BNB
From an on-chain standpoint, investor confidence in BNB has weakened across all address cohorts, which include both small (fish) and large (whale and shark) investors.
In particular, the number of addresses holding between 0.001 and 10 million BNB dropped significantly in January 2023 and has not been able to recover since. This increases the possibility that the token will continue its downward trend in February.
On the other hand, the number of addresses holding between 10,000 and 100,000 BNB tokens has recovered slightly, indicating that some buyers have taken advantage of the dip.
Santiment concedes that the current downtrend may not last long-term, stating that the SEC’s crackdown may be “a short-term FUD event.”
“Yes, it is possible that this is one of those cases where people panic and everything is back to normal for Binance on Friday [17 de febrero]”.
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