Fun

News Feed - 2023-07-13 05:07:42

Marcel Pechman3 hours agoBNB’s soaring futures open interest and regulatory woes weigh on the altcoin’s pricePersistent regulatory actions and concerning derivatives data are likely the main factors behind BNB’s bearish price action.1246 Total views60 Total sharesListen to article 0:00Market AnalysisJoin us on social networksThe price of BNB has experienced a 24.5% decline over the past 90 days, despite a 7% gain between July 10 and July 11. BNB (BNB) has performed worse than the overall altcoin market, indicating that the underlying cause for the bearish momentum persists.


It is highly likely that the correction in BNB’s price can be attributed to the lawsuit filed by the U.S. Securities and Exchange Commission against Binance and its CEO, Changpeng “CZ”s Zhao, on June 5, as the decoupling coincides with that event.BNB/USDT (blue) versus altcoin market capitalization since April 2023. Source: TradingView


To gain a more comprehensive understanding of the situation, analyzing derivatives contracts provides valuable insights into the positions of whales and market makers.Is the recent BNB price rally sustainable?


This analysis should highlight whether the surge above $245 on July 11 is supported by an improvement in sentiment or a balanced demand for leverage through BNB derivatives.


Price is undoubtedly the most important metric for understanding traders’ sentiment, but it does not encompass all possibilities. For instance, between August 2022 and September 2022, BNB outperformed the altcoin market by 19%.BNB/USDT (blue) versus altcoin market capitalization in late 2022. Source: TradingView


Regardless of the rationale behind BNB’s rally in 2022, one might conclude that the recent 90-day negative 24.5% performance represents a reversion to the mean as investors no longer believe the premium is justified.


While no metric is flawless, one should begin by examining the open interest in BNB futures markets to gain a broad overview of the demand for leverage during the recent underperformance.BNB futures open interest rose, but is it bullish?


In futures markets, long and short positions are always balanced, but a higher number of active contracts, or open interest, is generally positive, as it allows institutional investors, who require a certain market size, to participate. Moreover, a significant increase in the number of contracts in play typically indicates increased trader involvement.BNB futures aggregate open interest in USD. Source: CoinGlass


Notice how the BNB futures open interest surged from $355 million on July 5 to the current $476 million, approaching its highest level in 18 months. This data leaves no doubt about the demand increase for leverage using futures contracts.


The previous peak in open interest, at $490 million, occurred on Nov. 5, 2022. Interestingly, on that very day, the price of BNB reached a six-month high, followed by a significant correction of 28% in the subsequent five days.BNB/USDT price at Binance in late 2022. Source: TradingView


However, open interest does not necessarily indicate bullish or bearish sentiment among professional investors. The futures annualized premium measures the difference between longer-term futures contracts and the current spot market levels.


The futures premium, or basis rate, should ideally range between 5 and 10% to compensate traders for "locking in" their funds until the contract expiry. Therefore, levels below this range are bearish, while figures above 10% indicate excessive optimism.BNB 3-month futures annualized premium. Source: Laevitas


The current negative premium suggests that short sellers are paying 10% per year to maintain their positions. While this data aligns with typical bearish markets, it has been the norm for BNB rather than an exception. Furthermore, similar instances of a negative 10% futures premium occurred on March 17 and April 22, although they lasted for less than a week in total.BNB/USDT price at Binance. Source: TradingView


In terms of price, March 18 marked the end of a bull run that peaked at $345, followed by an 11.5% correction to $306 over the next 10 days. Similarly, when the BNB futures premium returned from the negative 10% level on April 26, the price of BNB declined by 12% in the following 16 days.BNB short positions may have been used to bypass vesting and lockup periods


Although it is impossible to establish causation and correlation, the data suggests that investors may be shorting BNB futures contracts to clear out spot order books and potentially trigger price pumps. Other possible explanations for a significant BNB futures premium include lockups, where BNB holders are restricted from selling their positions but seek to reduce exposure nevertheless.


These vesting periods could be a result of formal contracts with current or former employees and partners, or restrictions imposed by smart contracts. The agreements typically are on staked tokens or used as guarantees for launchpads and similar projects. Therefore, attempting to attribute this strategy to a single entity is rarely productive.


The derivatives data points to an increased appetite for leverage using futures contracts, particularly by shorts, considering the negative premium. This exerts downward pressure on BNB’s price as long as the futures premium remains negative. Although there is no guarantee that the price action will repeat itself, the current derivatives data does not support bullish momentum for BNB.


Collect this article as an NFTto preserve this moment in history and show your support for independent journalism in the crypto space.


This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.# Cryptocurrencies# Altcoin# SEC# Markets# Cryptocurrency Exchange# Derivatives# Leverage# Binance# Price Analysis# FuturesAdd reactionAdd reactionRelated NewsWho invented NFTs?: A brief history of nonfungible tokensBitcoin has entered a civil war — Over ‘art’3 key Ether price metrics point to growing resistance at the $1,750 levelFed rate pause triggers traders’ pivot to stocks — Will Bitcoin catch up?Why Cathie Wood is bullish on Coinbase stock and believes Bitcoin will reach $1 millionBitcoin holds $30K as bulls flaunt their advantage in Friday’s $715M BTC options expiry

News Feed

CBDCs: User privacy problem or currency of the future?
Stephen Katte9 hours agoCBDCs: User privacy problem or currency of the future?CBDCs have some benefits but also many drawbacks, which has sparked debate about whether adopting them is a good idea.504 Total views5 Total s
The Many Facts Pointing to Shinichi Being Satoshi
The Many Facts Pointing to Shinichi Being Satoshi A lesser known, yet uniquely compelling candidate for the real Satoshi Nakamoto is Japanese mathematician and number theorist Sh
Vitalik Buterin proposes faster Ethereum trades with single-slot finality
Helen Partz10 hours agoVitalik Buterin proposes faster Ethereum trades with single-slot finalityEthereum co-founder Vitalik Buterin proposed moving away from Ethereum’s epoch-and-slot mechanism to a single-slot finalit
Savannah Fortis11 hours ago​​Hong Kong authorities say 145 victims, $18.9M lost in Hounax scamAuthorities in Hong Kong confirmed 145 users were scammed on the unlicensed crypto exchange Hounax, resulting in $18.9 mil
Strong US Dollar Posts 5-Week High, Markets Price in a 75 bps Fed Rate Hike for June
Strong US Dollar Posts 5-Week High, Markets Price in a 75 bps Fed Rate Hike for June While precious metals, stocks, and cryptocurrencies saw a significant downturn this week, the U
CEX.IO to Provide One-Click DeFi Access, Lists New Tokens, and Offers Instant 0% Fee Visa Deposits
CEX.IO to Provide One-Click DeFi Access, Lists New Tokens, and Offers Instant 0% Fee Visa DepositsLONDON, the United Kingdom, September 26– CEX.IO, one of the leading internat
Inverse Head And Shoulders Breakout Suggests Bitcoin Price Is Headed To $300,000
Este artículo también está disponible en español. The Bitcoin price actionis showing strong bullish signals, as a rare Inverse Head and Shoulder pattern has just broken o
French regulator warns investors Bybit provided services ‘illegally’
Turner Wright4 hours agoFrench regulator warns investors Bybit provided services ‘illegally’The Autorité des Marchés Financiers reported Bybit has been blacklisted since May 2022 “for non-compliance with current
UAE Now Requires Agents to Report Real Estate Transactions Where Virtual Currency Is Used as Payment
UAE Now Requires Agents to Report Real Estate Transactions Where Virtual Currency Is Used as Payment The United Arab Emirates (UAE) has said it now requires real estate agents, bro
Nicholas Anthony2 hours agoExpect new IRS crypto surveillance to come with a surge in confiscationThe Justice Department is claiming that it"s "critical" for it to have the power to seize cryptocurrency from Am
XRP Historic Moment Coming In 2025? This Crypto Exchange Believes So
Este artículo también está disponible en español. In the cryptocurrency space, XRP is gaining much attention, and many people are making predictions regarding its prospec
William Suberg42 minutes agoBitcoin price briefly clears $31K as monthly, quarterly close nearsBitcoin tries to cement higher support as an important day for markets arrives.318 Total viewsListen to article 0:00Market Up