3 reasons why Binance’s BNB token risks sliding further by March

On February 13, BNB (BNB) recorded its worst daily performance since November 2022, falling 8.5% to below $285. The price of BNB has since recovered to over $298, but the likelihood of another sell-off remains high. Let’s look at a few reasons why.

BNB Rising Wedge Breakout

The continued decline in the price of BNB has been part of a wider breakout of the rising wedge.

Notably, on Feb. 9, BNB broke out of a rising wedge pattern, a bearish reversal setup that forms as price moves higher within the range defined by the two ascending converging trend lines.

Daily BNB/USD price chart breaking out of the rising wedge. Source: Trading View

As a general rule of technical analysis, the profit target of a rising wedge is measured after subtracting the maximum distance between the pattern’s upper and lower trendlines from the breakout point.

As such, the BNB rising wedge target is around $250, about 15% below current prices. Interestingly, the $250 level also served as support in May, September and November 2022.

SEC crackdown on Binance USD

Selling pressure in the BNB market has intensified primarily due to the US Securities and Exchange Commission (SEC) crackdown on cryptocurrency company Paxos.

The regulator accused Paxos of issuing and listing Binance USD (BUSD), a Binance-branded stablecoin that it considers an unregistered security. Paxos vehemently denied the allegations, noting that it would go to court if necessary.

But after this news, the markets became afraid. For example, according to Santiment, the number of addresses holding between 1,000 and 10 million BUSD has plummeted since February 13, resulting in more than $207 million in stablecoins being thrown out.

The number of addresses containing between 1000 and 10 million BUSD. Source: Sentiment

“This is an astonishing level of decline for a stablecoin, especially at a time when the other three stablecoins (Tether, USD Coin, Dai) are seeing a large accumulation of holders,” marked Sentiment, adding that the aftermath of the SEC lawsuit led to a decline in the price of BNB.

“It is also seeing a monthly high in trading volume as its price has fallen, meaning there is a higher chance of a potential continuation of the decline.”

BNB trading volumes. Source: Sentiment

FOOD event? Fish, whales, sharks are dropping BNB

From the network’s perspective, BNB holder sentiment has weakened across all address cohorts, which include both small-time (fish) and large-scale investors (whales and sharks).

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Notably, the number of addresses holding between 0.001 and 10 million BNB dropped significantly in January 2023 and has not been able to recover since. This increases the likelihood of the token’s downtrend continuing in February.

Number of addresses holding between 1,000 and 10 million BNB. Source: Sentiment

Moreover, the number of addresses holding 10,000-100,000 BNB tokens recovered slightly, indicating that some whales were buying the dip.

Sentiment acknowledges that the ongoing downtrend may not last long term, saying the SEC crackdown could be a “short-term FUD event.”

“Yes, maybe this is one of those times when people panic and by Friday everything is back to normal for Binance. [Feb. 17].“

This article does not contain investment advice or recommendations. Every investment and trading step involves risk, and readers should do their own research when making a decision.

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