Analysts have associated Binance Coin’s BNB problems with Fear, Uncertainty and Doubt (FUD) since the FTX demise.
Initially, Binance exchange attracted a lot of interest from investors after CEO Changpeng Zhao (CZ) exposed FTX corruption. The exchange’s native his coin surged from $269 on Nov. 11 to $300.
It is catching up to its previous success as it is trading below $250.
When will BNB recover? In the next section, we will sift through the exchange fears and extrapolate future prices.
Binance Coin BNB FUD Sifting
Fear around the Binance exchange culminates in four factors. Mazars ceases business with Binance, bankruptcy filings, CZ FTT statement on CNBC, and holdings of BUSD.
The collapse of the FTX exchange set the stage for most of the troubles in the crypto industry in November and December. The impact rippled through the industry, creating liquidity issues for sister companies, partners and investors.
Affected companies include Binance, Sequoia Capital, Galaxy Capital, BlockFi, Wintermute, CoinShares, Amber Group, Alameda, and Genesis Capital.
Major exchanges rushed to publish proofs of reserves to save face and prevent customers from bleeding. had little impact.
On December 16th, broad auditing and accounting firm Mazars suspended Binance’s cryptocurrency auditing service. BNB fell from $264 to $222 after a day due to ‘troubles’. Mazars did not release an immediate report on the same, prompting speculation within cryptocurrency Twitter.
Mazars has suspended other exchanges, including Crypto.com and KUCoin. There was nothing in particular to blame on Binance. Analysts have suggested that the move by the audit firm is a result of TradeFi’s growing wariness of Crypto.
Multiple investors are fleeing cryptocurrency exchanges for fear of implosion like FTX. They spared Binance, the world’s largest cryptocurrency exchange. Prior to FTX’s collapse, it was ranked #3 by trading volume.
On December 13th, Binance experienced withdrawals of up to $1.14 billion and $6 billion the next day, all handled with ease as shared by CZ. “There will be net withdrawals one day. There will be net deposits one day. It is business as usual for us.”
Despite high activity, Binance’s reserves continue to exceed $50 billion, according to DefiLlama. Nothing comes close to a bank run or a liquidity crisis. FTX was unable to process customer withdrawals in the same scenario.
In an interview with CNBC, CZ mentioned $2.1 billion in funds that were mixed up on the FTT. Critics distorted information and increased fear.
According to CZ, he did not refer to customer funds, but to funds Binance acquired from FTX shares. Earnings were also he BUSD, so when FTX went bankrupt, the exchange didn’t lose its entire investment.
According to Coinmarketcap, BUSD holds the majority of Binance reserves. Critics have distorted his $8 billion stake as misleading because Binance is the custodian of his BUSD.
However, Paxos actually issues BUSD, not Binance. The New York State Department of Financial Services regulates stablecoins, backed by U.S. dollars and Treasury bills.
Binance Coin BNB Price Outlook
The Binance ecosystem has faced a lot of criticism since rival FTX went bankrupt. The crypto winter has been tough on his BNB, too, with him down 50% from its opening price of $512 this year. At the time of writing, it was trading at $248.
Through chart price analysis, you can infer the momentum of the price increase from the MACD histogram. The MACD and signal lines are moving south, which could lead to a drop in price. The 14-day Relative Strength Index shows that the coin crossed oversold territory at the height of fear on December 16 and then recovered.
As you can see from the above analysis, the fear and collapse of FTX has a great impact on the price of BNB. Time will tell if centralized exchanges regain people’s trust.
BNB will likely recover after 2023 as the fear will fade over time. However, when negative news or fears intensify, BNB may fall.
Also read our BNB Price Prediction 2023 – 2031.