‘Thrice since 2023’ – Here’s what this negative reading means for BNB

As a seasoned researcher with years of experience in the cryptocurrency market, I have seen my fair share of market fluctuations and trends. The recent development of Binance’s funding rate turning negative once again is a trend that has caught my attention. Historically, such events have led to significant market movements.

As reported by Cryptoquant, the funding rates for Binance have once more dipped into negative territory. Typically, when funding rates on Binance show a downward trend, it can trigger substantial shifts within the market.

The on-chain analytics platform claimed that,

“The Funding Rates on Binance have been going down, making them negative for the third consecutive stretch since the year 2023. This is a significant development as it indicates a prolonged trend.”

Based on Nino’s analysis as a Cryptoquant expert, it appears that the current market situation has sparked increased interest. This could potentially lead to major market developments.

Significantly, funding rates typically function as recurring payments for both short-term and long-term investors. This system is primarily determined by the disparity in prices between perpetual contracts and current market prices.

When there’s a favorable financing cost, those holding long positions will pay those with short positions. This implies a bullish outlook where investors are prepared to overpay to maintain their positions. On the other hand, an unfavorable financing cost means that short position holders are paying long position holders. Typically, this indicates a market correction or bearsish market sentiment.

An analysis of market sentiment

As a crypto investor, I’ve noticed an interesting pattern with Binance – for the third time since 2023, the funding rate has dipped into the negative zone. This implies that short sellers are currently dominating the market, which could potentially lead to price fluctuations. It’s always fascinating to see these dynamics at play!

This suggests that traders generally anticipate more market declines ahead. Similarly, there’s a hint of apprehension related to potential drops, which historically tend to occur around the month of September, in relation to Bitcoin‘s cycle patterns.

It has been recently highlighted that Binance’s connections with governments is a significant concern. Just two days ago, Binance was alleged to have frozen accounts of Palestinians at the behest of Israel. As per Quantum Ready’s assertion, many Muslims have already withdrawn their funds from Binance due to this issue. He declared this action, suggesting that there’s a growing distrust towards Binance among the Muslim community.

“Consider the number of Muslims who utilize Binance. It’s likely that they withdrew their funds due to the decision allowing Israel to freeze accounts in Gaza.”

As an analyst, I’ve observed that external factors seem to have played a role in dampening the demand for long positions. It appears that empathetic and cautious traders are closing their positions proactively, aiming to safeguard their investments amidst apprehension.

What does this mean for Binance Coin?

It’s quite possible that a negative interest rate could significantly affect Binance Coin (BNB). When the funding rate is low or negative, it suggests that investors may be uncertain about the coin’s future direction. Looking at the price trend over the last month, BNB has experienced a decline.

Currently, BNB is being exchanged for approximately $535.48 following a 7.62% decrease during the last week. This represents a substantial drop compared to its peak of $598 that was reached two weeks back.

The drop is also a sign of the negative sentiment prevailing across the market.

Over the past seven days, the Relative Strength Index (RSI) has decreased from 62 to 46, indicating an increase in selling pressure among traders who are closing their positions.

Over the last week, there’s been a significant increase and sustained elevation in liquidations for long positions.

Indeed, the past week saw liquidations on long positions peak at $1.1 million, suggesting growing pessimism among investors.

The decrease in interest for holding long positions on BNB is also reinforced by the dwindling OI-adjusted funding rate, which has predominantly been negative over the last week. Even though there has been a slight rebound, the funding rate remains low, indicating a diminished demand for long positions as well.

In summary, the unfavorable funding rate at Binance appears to have impacted its own token, BNB. This is because there’s been a drop in interest for long-term investments in BNB, leading to these positions being closed (liquidated). This suggests a pessimistic outlook among traders, indicating a bearish market trend for BNB.

In light of the hike in selling pressure, BNB may drop further to the $523 support level.

2024-08-31 06:16

An analysis of market sentiment

What does this mean for Binance Coin?

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