Binance Coin (BNB) price fell nearly 7.3% on June 7 to below $275, its lowest level in three weeks.

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What’s more, the price of BNB could fall another 25-40% in 2022 as its parent company Binance faces allegations of violating securities regulations and laundering billions of dollars in illicit funds for criminals.

Two bad news in a row

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BNB was released as part of an Initial Coin Offering (ICO) in 2017 that raised $15 million to Binance.

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The token mainly behaves as a useful asset in the Binance ecosystem, primarily allowing traders to receive discounts on their trading activities. Simultaneously, BNB also functions as a speculative financial asset, making it the fifth largest cryptocurrency by market cap.

As of June 7, BNB has a market capitalization of $45.42 billion. Source: Coin Market Cap.

As a result, the US Securities and Exchange Commission (SEC) is investigating whether the 2017 BNB token ICO was a sale of securities that should have been registered with a regulator, according to sources contacted. Bloomberg.

This could put downward pressure on the price of BNB, which has already lost more than half its value since peaking in May 2021 at around $700.

BNB Holds Above May-July 2021 Support

In addition to the bad news, the BNB drop was also part of a broader correction trend in other parts of the crypto market, with major coins Bitcoin (BTC) and Ether (ETH) falling 7% and 7.25% on the same day.

BNB is now testing the 61.8 Fibonacci retracement level (around $274) on a Fibonacci retracement chart drawn from a $10 swing low to a $700 swing high. Interestingly, the same level played an important role as support during the May-July 2021 session that preceded the 170% price increase.

But weak fundamentals, including the Fed’s hawkish policy, have raised the possibility of BNB falling below the 61.8 Fibonacci line.

Cryptocurrency market fell in May, but there is hope in June

If that happens, BNB’s next downside target could be its 200-week exponential moving average (200-week EMA; blue wave) around $200, about 25% below today’s price.

The weekly Relative Strength Index (RSI) of BNB/USD, which is currently at 34, also shows more room for decline until the reading hits 30, an oversold level that indicates buying sentiment.

Weekly BNB/USD price chart. Source: Trading View

Meanwhile, a further drop below the 200-week EMA could force BNB to look to the 0.786 Fibonacci line near $160 as support, down 40% from today’s price.

Conversely, if BNB manages to hold above $274, it could bounce to the area defined by its 0.5 Fibonacci line near $355 and its 50-week EMA (red wave) near $380, more than 20% above current levels. prices.

The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Every investment and trading step involves risk, you should do your own research when making a decision.