Crypto traders are losing confidence in BNB, the native coin of the embattled crypto exchange Binance, as regulatory scrutiny of the industry intensifies.
According to Coinglass statistics, the open interest-weighted financing rate for Binance’s BNB coin turned negative this weekend.
The lack of open positions indicates that traders expecting a price drop are willing to compensate those anticipating profits in order to maintain their bearish holdings on the cryptocurrency.
The cryptocurrency exchange with the highest trading volume in the world has recently come under intense regulatory investigation.
Regulators have been increasing their control over the cryptocurrency trade everywhere, from Australia to the US.
The US Securities Exchange Commission (SEC) has levelled the most serious charges against Binance and its CEO, Changpeng Zhao, including mishandling users’ funds and misleading financial regulators.
BNB Perpetual Swaps’ Open Interest Exceeds $460 Million
The perpetual swap market’s negative open interest rate reflects traders’ rising scepticism towards the exchange’s token.
A futures contract that never expires is known as a perpetual swap market and is employed in cryptocurrency exchanges.
The open interest of BNB in perpetual swaps has surpassed $460 million, according to data from Coinglass.
Shiliang Tang, the chief investment officer of the cryptocurrency investing business LedgerPrime, told Bloomberg that the BNB trade appears to be a “very short-term bet” because investors must pay a high price to maintain open holdings.
He said, “There isn’t really a system to borrow a spot BNB.”
Tang also emphasised that, due to a lack of liquidity, shorting BNB on the spot market is exceedingly challenging.
BNB, the fifth-largest cryptocurrency by market capitalization, is currently trading just above $239, down about 2% over the previous day.
On July 14, when most altcoins rallied following the historic decision in the Ripple lawsuit against the SEC, BNB momentarily climbed to $260.
Binance Is Still Under Regulatory inspection.
The US SEC filed a lawsuit against the exchange last month on grounds that the business and its CEO ran an unlicensed exchange, broker-dealer, and clearing agency in the US.
The financial watchdog also charged Binance with misrepresenting trading controls.
According to the lawsuit, CZ and Binance established a network of businesses to manage the cash for Binance. US. The industry leader in cryptocurrency exchanges has refuted all of the SEC’s charges.
Many banking partners have withdrawn their support from Binance under the increased regulatory scrutiny sparked by US regulators, which has restricted the exchange’s capacity to accept deposits and withdrawals of fiat currency.
The largest US-based exchange, Coinbase, is also involved in a legal dispute with the SEC that might determine the direction of the country’s cryptocurrency market. Binance is not the only exchange in the US experiencing regulatory pressure.