Downside risks for BNB also come from a recent Reuter exposé that claims Binance laundered “at least $2.35 billion in illicit funds.”
Binance Coin (BNB) price dropped by nearly 7.3% on June 7 to below $275, its lowest level in three weeks.
What’s more, BNB price could drop by another 25%–40% in 2022 as its parent firm, Binance, faces allegations of breaking securities rules and laundering billions of dollars in illicit funds for criminals.
Bad news twice 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 mainly behaves as a utility asset within the Binance ecosystem, primarily enabling traders to earn discounts on their trading activities. Simultaneously, BNB also functions as a speculative financial asset, which has made it the fifth-largest cryptocurrency by market capitalization.
BNB market capitalization was $45.42 billion as of June 7. Source: CoinMarketCap
As a result, the U.S. Securities and Exchange Commission (SEC) is investigating whether the ICO of BNB tokens in 2017 was a sale of securities that should have been registered with the regulator, according to sources contacted by Bloomberg.
So, will all exchanges including binance delist $BNB like they did with $XRP?
— Crypto Mark ❄️ (@MarkCrypto8) June 6, 2022
This risks putting downward pressure on BNB’s price, which has already lost more than half of its value after peaking out in May 2021 at around $700.
BNB holds above May–July 2021 support
In addition to the bad news, BNB’s plunge also came as a part of a broader correction trend elsewhere in the crypto market, with top coins Bitcoin (BTC) and Ether (ETH) dipping by 7% and 7.25% on the same day.
$BNB aggressively shorted because of the FUD. pic.twitter.com/BzvGtPcK3d
— Byzantine General (@ByzGeneral) June 6, 2022
Now, BNB tests the 61.8 Fib retracement level (near $274) of the Fibonacci retracement graph sketched from its $10-swing low to $700-swing high. Interestingly, the same level was instrumental as support during the May–July 2021 session that preceded a 170% price rally.
But weak fundamentals, including the Federal Reserve’s hawkish policy, have raised BNB’s possibility of dropping below the 61.8 Fib line.
Related: The crypto market dropped in May, but June has a silver lining
If this happens, then BNB’s next downside target could be its 200-week exponential moving average (200-week EMA; the blue wave) near $200, down about 25% from June 7’s price.
The BNB/USD pair’s weekly relative strength index (RSI), now at 34, also shows more room to drop until the reading hits 30, an oversold level that indicates buying sentiment.
BNB/USD weekly price chart. Source: TradingView
Meanwhile, a further drop below the 200-week EMA could have BNB eye the 0.786 Fib line near $160 as its support, down by 40% from June 7’s price.
Conversely, if BNB manages to hold strong above $274, it could rebound toward the area defined by its 0.5 Fib line around $355 and its 50-week EMA (the red wave) near $380, up over 20% from the current price level.
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