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TA: How Binance’s Regulatory Woes Have Plagued BNB’s Rise
Binance is the largest and most popular cryptocurrency exchange in the world. The platform remains a top option for anyone looking to get into the crypto space and make money.
But, the past few months have been a bit of a challenge for Binance. The company has faced opposition from different governments. Now, all of these appear to be stifling the rise of its coin, BNB.
It All Started So Well
Binance launched BNB in 2019 as its exchange token. The coin serves many purposes, including offering a discount for trading fees on Binance. BNB holders will also be able to stake it and make micropayments on the Binance Smart Chain. The coin might have had humble beginnings, but it soon skyrocketed.
BNB showed what exchange tokens could and should be. The coin rose thanks to its relationship with Binance, and it soon became the standard for other exchange tokens. As of early 2021, it displaces USDT as the third most valuable cryptocurrency in the world.
The rise in early 2021 was due to several things. One of those was the crypto market rally. Institutional adoption had poured into the crypto space, meaning that more people wanted to buy cryptocurrencies. In addition, Binance is the world’s largest exchange, so people were naturally using it to make transactions.
As Binance grew, so did BNB. The coin’s price jumped from just $33.4 to $691.2 in just a few months. This performance beat out every other large-cap coin in the world at the time.
But, the market downturn came, and BNB immediately dived. Due to the downturn, the coin’s price went as low as $213.8, with many other cryptocurrencies seeing big dips.
Following the downturn in May, the market experienced successive bearish cycles. The party was over, and only the brave investors would be able to hold on for the long haul.
Eventually, the downturn would end, and the market would start seeing significant jumps again. This came around August, and it was a pretty good time for the crypto market. Sadly, BNB didn’t perform as expected. Investors had noted the impressive price jump that came earlier in the year, and they expected something comparable. But, BNB wasn’t delivering what they hoped.
Regulatory Problems Set In
The big reason for this was Binance. Over the past few months, the exchange has constantly found itself in trouble with regulators. CONSOB, Italy’s financial markets regulator, was the first to get into a brawl with Binance. The company announced on its website that Binance was unregistered in Italy, and all affiliated companies were.
The CONSOB announcement even said that Binance and its affiliated platforms were operating without a license. As such, Binance had to leave the country.
Over the past few months, the regulatory issues have continued to pile up for Binance. The exchange has had a dirty tussle with the Financial Sector Conduct Authority (FSCA) in South Africa. It challenged the FSCA’s authority to regulate it, explaining that it answers instead to South Africa’s Financial Intelligence Center. We doubt that this is the last that anyone will hear about this issue.
Problems for Biancne’s Bottom Line
These regulatory problems have only gotten worse and are now affecting Binance’s business. In September, Binance confirmed that it would stop futures and options trading in Australia. In addition, the company confirmed that Australian users would have 90 days to reduce or entirely shut off their positions. Once the 90-day period passes, Australian users won’t be able to access derivatives at all.
Binance made a similar announcement for Singapore. The company said that Singaporean users would be unable to access several functions on its platform. These include fiat deposits, crypto spot trading, and more. Based on the new directive, Binance’s Singapore users will have to stop all activities on the platform and make withdrawals. The company has also blocked users in the country from downloading its mobile app on any app store.
Other areas where Binance has faced issues include Brazil, where it blocked derivatives trading. In addition, the company has suspended its operations in Hong Kong and mainland China. Furthermore, it has cut off products trading in Germany and the Netherlands. The U.K.’s Financial Conduct Authority (FCA) also banned Binance’s marketplace.
Problems like these will only put a damper on Binance’s profitability. As a result, BNB’s price has taken a big hit too.
Understanding the Technical Parts
From a technical standpoint, BNB is still in murky waters. The coin has passed the $400 mark once more, so that’s good news. Its recent performance has also helped it to cross its short-term moving average (M.A.) indicators. But its 50-day M.A. still stands above it.
As expected, BNB is now trading above its long-term MA indicators. But, interestingly, BNB’s moving average convergence divergence (MACD) is still negative. This means that the coin is displaying a sell signal. That’s not the best for sure.
With a relative strength of 57.31, BNB is underbought. Long-term investors can make a play for it right now, but they should know the risks.
So far, Binance has taken steps to rectify these regulatory problems. However, it will take a while before things stabilize. In the meantime, hope for a market rally could also help the coin. Being a large-cap asset, BNB will see gains when the market rallies.