What Next for Binance Coin (BNB) Price as Changpeng Zhao Bows to Federal Charges ?

Binance Coin (BNB) Price Insights:

• BNB price has declined 10% as the Binance CEO Changpeng Zhao agrees to step down.
• The shock announcement comes as part of a historic $4.3 billion settlement of Federal charges filed by the US SEC.
• Funding rates also dropped, indicating that investors are betting to the downside.

Binance Coin (BNB) price has tumbled 10% from $267 to $240 as markets reacted negatively to events surrounding Binance Founder Changpeng Zhao’s exit. Derivative Market analysis provides vital insights into possible BNB price action for the days ahead. 

Over $3 Million Trades Liquidated Within an Hour

Binance Founder Changpeng Zhao has confirmed his exit as CEO of the world’s largest crypto exchange. While a successor has been announced, investors trading Binance’s native BNB coins have made a series of initial bearish moves in response to CZ’s ouster.

Binance has been the subject of multiple bouts of regulatory squabbles in 2023. The latest bout has triggered a knee-jerk bearish reaction among crypto investors trading BNB, the native coin of the Binance ecosystem.

Within an hour of the report, more that $3 million worth of BNB Long positions had been liquidated, according to crypto derivatives market data tracker Coinglass.

The Total Liquidations chart tracks the number of trades closed, liquidated, or wiped out within a given period. A significant spike in LONG liquidations during a major news event, as observed above, is a bearish signal. It is an indication that investors are anticipating a prolonged negative fallout.

The chart also illustrates that this is the highest daily liquidation of bullish BNB contracts in 90 days. This puts BNB price at risk of a Long Squeeze.

A long squeeze is a market phenomenon that occurs when traders who have taken long positions (betting on the price of an asset to increase) face significant losses and are forced to sell their positions to limit their losses.

This selling pressure, in turn, can lead to a rapid and extended decline in the BNB price over the next few days.

Funding Rates Drop as Investors Brace for Pain

In further confirmation of the bearish stance, BNB Funding Rate has also entered a sharp decline within the hour of Changpeng Zhao’s reported exit announcement.

The chart below illustrates that BNB Funding Rate dropped from a daily peak of  0.025% to 0.0093% at press time.

Perpetual Funding Rates represent the variance between the marked price of the perpetual futures market and the index (spot) price. Generally, when Funding Rates begin to decline, it means that bullish traders are paying less to SHORT traders to maintain their open positions.

The sharp decrease in BNB Funding Rates means most investors anticipate that prices and market liquidity will decline further in the coming days.

BNB is currently trading at $240 at press time. But if the Funding Rate slides into negative values, the bears could effectively seize control of the market and force a BNB price downswing closer to the $200 mark.

On the flip side, the quick appointment of Richard Teng as new CEO could allay initial market FUD and boost investor confidence. In this case, bullish traders swooping in to buy the dip could inadvertently trigger a quick BNB price rebound toward the $250 area.