• Crypto traders are showing pessimism in the derivatives market for Binance’s native coin BNB amid regulatory turmoil.
• The open interest-weighted funding rate has turned negative on BNB, meaning that traders betting on a price decline will pay to keep bearish positions open.
•Binance and its CEO Changpeng Zhao are facing accusations by the US Securities Exchange Commission (SEC) of mishandling user funds and lying to financial regulators.
Growing Pessimism in Crypto Derivatives Market
Crypto traders are showing pessimism in the derivatives market for the embattled crypto exchange, Binance’s native coin BNB, amid growing regulatory turmoil. The open interest-weighted funding rate has turned negative on BNB, meaning that traders betting on a price decline are willing to pay those who are waiting on gains to keep their bearish positions open on the cryptocurrency.
Regulatory Scrutiny Increases
Regulators from Australia, Europe to the US have all tightened their grip on the crypto exchange. The world’s largest crypto exchange in terms of trading volume is now facing serious accusations by US Securities Exchange Commission (SEC), which include mishandling users‘ funds and lying to financial regulators.
Negative Open Interest Reflects Growing Pessimism
The negative open interest reflects traders’ growing pessimism towards Binance’s token. According to Coinglass data, the open interest of BNB on perpetual swaps has crossed $460 million. Shiliang Tang, Chief Investment Officer at crypto investment firm LedgerPrime stated that it is difficult to short BNB due to lack of liquidity because there is no real way to borrow spot BNB.
BNB Price Movement
BNB, which is currently changing hands at just above $239, dropped 2% in 24 hours as per CoinMarketCap data when most altcoins rallied after a landmark ruling in Ripple’s lawsuit against SEC last month.
The increased regulatory scrutiny initiated against Binance and its CEO Changpeng Zhao has led to a decrease in confidence among crypto traders as reflected by negative open interest rates seen across derivative markets for its native coin -BNB-.