- Binance burned almost two billion BNB with almost no effect on the price action.
- Short positions dominated and selling could increase on exchanges.
For the 24th consecutive quarter, Binance has engaged in burning its native cryptocurrency Binance Coin [BNB]. This was communicated in an announcement on 19 June. According to the communiqué, a total of 1.99 million BNB was burned.
How much are 1,10,100 BNBs worth today?
In December 2021, Binance introduced the BNB Auto-Burn procedure. At that time, the crypto exchange mentioned that the motive behind the activity was to provide improved transparency to the BNB community.
This also includes adjusting the burn amount to reflect the demand and supply demand of the coin. Ever since the first BNB burn, the effect on the coin price has not been exactly eye-catching.
Triggering pessimism
But now, BNB’s troubles were beyond the impact of the burn mechanism. Instead, the FUD around the coin seems to be growing. And this has been fueled by allegations that Binance, its underlying exchange, has not been pellucid in its dealings.
While CEO Changpeng Zhao (CZ) had repeatedly said there was nothing of such, some corners still believed that there was a brewing challenge with the exchange operation. As a result, this has affected the sentiment traders have toward BNB.
From the derivatives end, Coinglass showed that BNB’s long/short ratio has fallen below 1. At press time, the indicator was at 0.92.
Source: Coinglass
Typically, the long/short ratio is considered a barometer of investor sentiment. By looking at the amount of long buying and short selling, the indicator, when above 1, reflects a bullish perception.
Therefore, the drop in BNB’s case suggests that the average trader expects the coin price to fall. Like the long/short ratio, an assessment of the funding rate showed that most traders were bearish.
Interest in shorts and exchanges can…
The funding indicates the relationship between the perpetual price and the spot price. When the spot price is below the perpetual price, then the funding rate is positive. In this situation, traders are bullish on price action.
However, BNB’S funding rate was -0.037. This implies that the perpetual price was below the mark price. Hence, traders expect another BNB fall in the short term.
Source: Santiment
Also, the weighted sentiment was -0.488. Used to measure the unique social commentary about an asset, BNB’s weighted sentiment showed that, besides futures and options traders, the broader market participants were also not elated about the coin.
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Despite the widespread bearish sentiment, BNB’s volume has repeatedly hit highs over the last few days. On 19 July, the on-chain volume rose again to 780.55 million.
However, the hike does not mean that BNB’s price would pump. Rather, it indicates that a lot of the coin has been transferred to exchanges lately.
Source: Santiment
The spike in exchange open interest also reinforced this notion. If this trend continues, BNB might experience another wave of selling pressure.
