BNB price risks 40% drop as SEC launches probe against Binance

Binance Coin (BNB) value dropped by practically 7.3% on June 7 to under $275, its lowest degree in three weeks.

What’s extra, BNB value may drop by one other 25%-40% in 2022 as its father or mother agency, Binance, faces allegations of breaking securities rules and laundering billions of {dollars} in illicit funds for criminals.

Two unhealthy information in a row

BNB was issued as a part of an initial coin offering (ICO) in 2017 that amassed $15 million for Binance.

The token primarily behaves as a utility asset inside the Binance ecosystem, primarily enabling merchants to earn reductions on their buying and selling actions. Concurrently, BNB additionally capabilities as a speculative monetary asset, which has made it the fifth-largest cryptocurrency by market capitalization.

BNB market capitalization was $45.42 billion as of June 7. Supply: CoinMarketCap

Because of this, the U.S. Securities and Alternate Fee (SEC) is investigating whether or not the ICO of BNB tokens in 2017 was gross sales of securities that ought to have been registered with the regulator, in line with sources contacted by Bloomberg.

This dangers placing downward stress on BNB’s value, which has already misplaced greater than half of its worth after peaking out in Might 2021 at round $700.

BNB holds above Might-July 2021 assist

Along with the unhealthy information, BNB’s plunge additionally got here as part of a broader correction development elsewhere within the crypto market, with prime cash Bitcoin (BTC) and Ether (ETH) dipping by 7% and seven.25% on the identical day.

Now, BNB exams the 61.8 Fib retracement degree (close to $274) of the Fibonacci retracement graph sketched from its $10-swing low to $700-swing excessive. Curiously, the identical degree was instrumental as assist throughout the Might-July 2021 session that preceded a 170% value rally.

However weak fundamentals, together with the Federal Reserve’s hawkish policy, have raised BNB’s risk of dropping under the 61.8 Fib line.

Associated: The crypto market dropped in May, but June has a silver lining

If this occurs, then BNB’s subsequent draw back goal might be its 200-week exponential shifting common (200-week EMA; the blue wave) close to $200, down about 25% from right this moment’s value.

The BNB/USD pair’s weekly relative energy index (RSI), now at 34, additionally reveals extra room to drop till the studying hits 30, an oversold degree that signifies shopping for sentiment.

BNB/USD weekly value chart. Supply: TradingView

In the meantime, an additional drop under the 200-week EMA may have BNB eye the 0.786 Fib line close to $160 as its assist, down by 40% from right this moment’s value.

Conversely, if BNB manages to carry robust above $274, it may rebound towards the realm outlined by its 0.5 Fib line round $355 and its 50-week EMA (the crimson wave) close to $380, up over 20% from the present value degree.

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