BNB, the native cryptocurrency of the BNB Chain and the fourth largest crypto by market cap has been heavily shorted across exchanges such as Bybit, Binance, OKX, Bitget, Huobi and several others.
These short selling is primarily because of cases by regulators.
Let us analyze the situation with technical analysis to uncover if this is FUD, or some price crash is imminent in BNB. We will also the possibilities of a short squeeze.
Details of Massive Short Selling
If we take a look at the 8-hour charts of combined BNB data from all exchanges, we can see that there is a massive short selling taking place since the last two weeks since July 4, 2023.
The current short selling can be analyzed by the fact that the funding rates are as low as -0.18% . This signals that there is a shortage of people who want BNB to go upwards and an increased number of short-sellers, people who want BNB to crash.
These short-sellers are increasing their bets on the fall of BNB due to several fundamental reasons.
Reasons for BNB Short Selling
Several events in the near term led up to the troubles for Binance, its exchange and its native cryptocurrency.
- Binance US is facing 13 charges from the SEC, one of which is allowing some high value US-based investors access the Binance.com while other US customers were restricted.
- The SEC has also charged them for offering exchange services without registration and offering cryptocurrency earn programs without license.
- Recently Binance has laid-off 1000 employees which might signal towards a cash crunch in the company. There are reports by CNBC that it may layoff another 2000 executives. Since BNB is attached to Binance Exchange, it’s price faces selling pressure.
- Binance was also made to exit France, Netherlands and Belgium due to regulatory pressure. Therefore it is losing markets in countries with higher income.
Fear, Uncertainty or Doubt
Yes, there is some uncertainty over the future of the exchange because it faces regulatory pressure in several countries and has been made to exit Netherlands, Belgium and France directly or indirectly.
There is also some uncertainty because of the layoffs. The nature of these layoffs are still unclear.
Another fear is the loss of US as a market which is the largest crypto market in terms of its financial size.
BNB Price Analysis
Over the last six months its price has lost a good portion of its value. BNB reached the levels of $350 on 16 April and since then, has been continuously falling.
The current price (at press time) was $241. This accounts for almost a one-third (32%) fall in prices.
Daily charts show that there is a high resistance in the zone of $250-$265 from where the prices have bounced back after reaching $256 on July 13, 2023.
However, the prices have some support at $225 from where they have bounced upwards thrice in the past month. We can take this price level as a strong support zone.
Other technical indicators show weakness in prices:
- There is an increased selling pressure in spot markets which is visible in the red volume candles.
- RSI is getting weaker. It could not cross the level of 57 which indicates weakness in prices as RSI is considered bullish only after 70 in current crypto market situation.
- MACD is moving towards a negative divergence which can be seen in the meeting of red and orange lines. Bearish markets start when the orange line is above the blue line.
Crash or Short Squeeze?
The possibility of a crash or short squeeze can only be clear if BNB breaks its resistance at $265 or its support at $225.
A breakout above the resistance could mean a heavy short squeeze which might take BNB prices above $300.
A breakdown below $225 means that BNB will see a overwhelming domination by sellers and the prices could even go below $200.
It seems lucrative to short now, but it is best to wait for the above levels to take any action because any short squeeze in an already bullish market can erase your capital.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.