Large BNB Shorts Spark Speculations of More Binance Trouble

• Binance is facing significant regulatory and corporate challenges.
• BNB, a token heavily linked to the exchange, is facing bearish pressure.
• The market sentiment has sparked speculation of potential trouble.

Binance, the world’s largest crypto exchange, has been at the center of a regulatory and corporate storm in recent months. Following a lawsuit from the United States Securities and Exchange Commission in June, the exchange has lost several key executives and reportedly laid off over 1,000 employees. 

While Binance Chief Executive Officer Changpeng “CZ” Zhao continues to dismiss concerns surrounding the firm as narratives created to fuel FUD (fear, uncertainty, and doubt), the market does not appear convinced. Amid growing concerns, recent BNB perpetual futures market data suggests that traders believe Binance’s troubles are far from over.

More Trouble or Potential Short Squeeze?

At the time of writing, BNB’s open interest-weighted funding rate is at -0.18%, its lowest point since April, with its open interest up 4.29% in the last 24 hours, per data from CoinGlass. It is worth noting that the negative funding rate indicates a high presence of short sellers willing to pay bulls to keep their positions open.

These figures have grabbed the attention of prominent traders within the crypto community, who have warned that trouble may be brewing for Binance as sentiment about the crypto exchange is often mirrored by investor sentiment towards BNB.

“Typically these readings precede some bad news for Binance. Wonder what’s coming?” Skew tweeted on Sunday, July 16.

Skew was not alone in this sentiment, as Daan Crypto Trades spotting the rising open interest, highlighted that the last time it surged like this was just before the SEC lawsuit. The prominent crypto trader highlighted that there had been speculation that the U.S. Department of Justice would file a lawsuit against Binance in recent weeks. 

Despite these speculations, Skew and Daan Crypto Trades also alluded to the possibility of a short squeeze. A short squeeze occurs when short sellers abandon their positions, leading to a rapid price move upward. Short squeezes typically happen in times of unsustainable bearish sentiment. 

Skew highlighted the $265 price point as the level to watch. At the time of writing, BNB is trading for $243.3 per data from CoinMarketCap.

On the Flipside

• Zhao continues to dismiss concerns surrounding the firm as narratives created to fuel FUD.
• A former SEC official has asserted that Binance will face criminal charges from the DOJ.

Why This Matters

BNB is the native token of Binance’s BNB chain. The token’s price action is typically heavily linked to sentiment surrounding the crypto exchange.

Read this to learn more about the potential leadership crisis at Binance:

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