On Feb. 13, Binance’s native token, BNB, recorded its worst daily performance since November 2022, falling 8.5% to below $285. BNB price has since recovered to over $298, but its possibility of facing another selloff remains high. Let’s take a look at a few reasons why.
BNB price rising wedge breakdown
The ongoing decline in BNB’s price came as a part of a broader rising wedge breakdown.
Notably, on Feb. 9, BNB broke out of its rising wedge pattern, a bearish reversal setup that forms as the price trends upward inside a range defined by two ascending, converging trendlines.
As a rule of technical analysts, a rising wedge’s profit target is measured after subtracting the maximum distance between the pattern’s upper and lower trendline from the breakdown point.
Therefore, BNB’s rising wedge target comes to be near $250, down about 15% from current prices. Interestingly, the $250 level has also served as support in May, September and November 2022.
SEC crackdown on Binance USD
The selloff pressure in the BNB market escalated primarily due to the U.S. Securities and Exchange Commission’s (SEC) crackdown on crypto company Paxos.
The regulator has accused Paxos of issuing and listing Binance USD (BUSD) — a Binance-branded stablecoin — which it deems an unregistered security. Paxos has categorically denied the allegation, noting that it would go to court, if necessary.
But markets have become fearful after this news. For instance, the number of addresses holding between 1,000 and 10 million BUSD dropped dramatically since Feb. 13, dumping over $207 million in stablecoins, based on data from Santiment.
“This is an astounding level of stablecoin dropping, especially while the other three stablecoins (Tether, USD Coin, Dai) have been seeing big holder accumulations,” noted Santiment, adding that the ramifications of the SEC lawsuit have been pushing BNB price lower.
“It also is seeing a month-high in trading volume as its price has dropped, meaning there is a higher probability of the plummet potentially continuing.”
FUD event?Fishes, whales, sharks dump BNB
From an on-chain perspective, BNB holding sentiment has weakened across all address cohorts, which includes both small (fishes) and large investors (whales and sharks).
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