The ongoing crackdown by the US SEC on the crypto industry has taken a toll on one of the largest exchanges in the market, Binance.
The SEC recently filed a lawsuit against Binance.US, which has resulted in a significant decline in the value of Binance Coin (BNB).
BNB has dropped more than 23% in the last week alone, currently trading at $238.
Binance CEO’s Bitcoin Sell-Off
As reported by NewsBTC, BNB is facing a potentially catastrophic situation after an exploit on the Binance Smart Chain’s Binance Bridge. The exploit could liquidate $200 million on Venus Decentralized Autonomous Organization (DAO) if the BNB price drops to $220.
Given these developments, reports now suggest that Binance and its CEO, Changpeng Zao, sell spot Bitcoin (BTC) to prevent BNB from falling to $220. This move has been taken to defend against the liquidation of BNB at this key level, but it also capped the upside potential of Bitcoin.
The practice of selling spot Bitcoin to purchase BNB is known as a “liquidation waterfall,” it is a common tactic used by exchanges to protect their users from significant losses. As spot Bitcoin is sold off, BNB is purchased, which helps to defend the $220 liquidation level. However, this also puts a cap on the upside potential of Bitcoin as the selling pressure on Bitcoin increases.
According to the crypto trader “JW”, Binance and CZ have been selling spot Bitcoin at an alarming rate to support BNB, as seen in the chart above, which has resulted in the decline of Bitcoin’s value. While this move may help defend against the liquidation of BNB, it can potentially negatively impact the wider cryptocurrency market.
In addition, despite positive economic news from the US, Bitcoin is struggling to break through its newly formed resistance at $26,400 and is currently trading at $25,800. The US Consumer Price Index indicates that the country’s inflation is slowing down, creating a more “relaxed” economic environment.
However, concerns over regulatory crackdowns and alleged selling pressure from Binance and its CEO are mounting, resulting in selling pressure preventing the largest cryptocurrency from continuing its bullish trend.
Bitcoin Analyst Anticipates Drop To $24,000
According to cryptocurrency analyst Michael Van de Poppe, Bitcoin is currently facing a crucial resistance level at $26,400 and has been unable to break through it. As a result, Van de Poppe expects the markets to drop into the Federal Open Market Committee (FOMC) meeting, which is scheduled for tomorrow.
Van de Poppe’s analysis suggests that Bitcoin’s price may experience some downward pressure in the short term. However, he also sees this as an opportunity for traders to buy into the market at a lower price point.
The area around $24,500-$25,000 is a significant support level, and if Bitcoin’s price drops to this mark, it could present an attractive buying opportunity for investors.
Featured image from iStock, chart from TradingView.com