- The FUD in the crypto market is far from over, and many investors wonder what might happen if the FTX saga happens to Binance.
- While it is true that if Binance crashes, the crypto will take a big hit, such a crash would have negligible effects on macroeconomic conditions.
- BNB appears fundamentally strong compared to FTX and shows no strong indications of a crash
The wave of fear, uncertainty, and doubt that dominated the crypto market throughout 2022 is far from over, especially with the Binance saga.
Starting with the collapse of the Terra ecosystem in May, before the crash of Sam Bankman-Fried’s FTX, crypto exchanges (centralized ones in particular) have seen a steady spike in withdrawal transactions.
Over the better part of the year, these exchanges have recorded massive outflows of customers as investors rush to pull their assets off these platforms.
In recent news, it now happens that this FUD that has forced some investors to pull their crypto off exchanges and others to give up on crypto altogether is now at Binance’s doorstep.
Binance’s FUD Wave
As many know, Binance is the largest centralized crypto exchange in the world by trading volume. This means that if Binance ever goes down as FTX did, the effects would be catastrophic.
The CZ-led crypto exchange now finds itself amid several controversies, including a rumoured bank run, a potential investigation on money laundering charges, and declining customers.
In a bid to calm its investors in November after the FTX debacle, Binance released a document that its CEO CZ referred to as an “audited” proof of reserves. Binance did this to show investors that their crypto/money was intact and that the FUD was unnecessary.
However, a good percentage of the crypto ecosystem is not buying it, and the FUD remains as strong as ever. Amid the fear and doubt, there have even been rumours that Binance’s CZ took out Bankman-Fried’s FTX on purpose as a way to eliminate the competition.
In the middle of the FUD, the crypto ecosystem also saw massive withdrawals by Justin Sun, the CEO and founder of TRON from Binance, causing several other investors to do the same, even after SUN returned $100 million to the exchange.
Is Binance Too Big To Crash?
The difference between centralized exchanges like Binance and banks should be understood by everyone.
Crypto exchanges Like Binance, KuCoin, and even Uniswap are not as integrated into the larger economy as traditional financial institutions (like banks) are. This poses a controlled risk to financial systems uninvolved with crypto.
Because of the FUD surrounding Binance, several speculators have drawn some similarities between Binance and FTX or BNB and FTT.
FTX offered FTX Token (FTT) to its customers, along with several promised benefits; however, behind the scenes, FTX was artificially inflating the price of their token and using it as collateral for loans.
FTX’s illegal strategy worked very well for a while and was bound to continue working as long as investors still held faith in the cryptocurrency.
However, the ongoing bear market introduced a new level of FUD to the market, exposing FTX and its illegal operations.
While FTT was FTX’s artificially inflated native cryptocurrency, Binance’s coin (BNB) is much more than that. Similar to how the Wei is the gas token for the Ethereum network, BNB is the native cryptocurrency of the Binance Smart Chain (BSC).
What’s Next for BNB?
While FTT is all but dead in the water in terms of price, BNB has shown considerable price strength despite the FUD.
The cryptocurrency has only declined by less than 15% over the last 30 days and is now trading at $242 at the time of writing.
BNB has consolidated for days after falling below the $250 mark. The cryptocurrency is now trying to break above this zone again. BNB’s inability to breakout indicates that the bears are strong around this price level and are defending it against the bulls.
If BNB manages to break out of the $250 zone and possibly hit $255, the cryptocurrency may rally straight up into a retest of its 50-day moving average around the $274 – $300 zone.
However, if the bears prove stronger than the bulls, the next move to the bottom would be steep and may take the cryptocurrency’s price below $263. if the bulls cannot catch up, one o the next possible bottoms would be the psychological $200 zone.
The RSI on the daily chart shows that the bears are currently in control and sit below the neutral zone at 37.9.
However, the RSI signal line is now squeezed against the RSI-based moving average and may indicate that the bulls are a formidable opponent against the bears.
Overall, it is easy to draw an ascending channel on BNB’s price action since May. If this assumption is valid, then the rejection of BNB from the $250 zone would take it straight down to the bottom of the channel, around $227, before a potential bounce or breakdown.
BNB appears very strong compared to several other cryptocurrencies and shows no strong indications of a potential crash.
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it 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.