Crypto traders are expressing pessimism in the derivatives market regarding Binance’s native coin BNB, as regulatory turmoil continues to plague the embattled crypto exchange. According to data from Coinglass, the open interest-weighted funding rate for BNB turned negative over the weekend. This negative open interest indicates that traders who are betting on a price decline are willing to pay those who are waiting for gains to keep their bearish positions open on the cryptocurrency.

Binance, the world’s largest crypto exchange in terms of trading volume, has recently come under intense regulatory scrutiny. Regulators from Australia, Europe, and the US have all tightened their grip on the crypto exchange. The US Securities Exchange Commission (SEC) has leveled the most serious accusations against Binance and its CEO Changpeng Zhao, including mishandling users’ funds and providing false information to financial regulators.

The negative open interest rate in the perpetual swap market reflects traders’ growing pessimism towards Binance’s token. The perpetual swap market is a type of futures contract used in crypto markets that does not expire. Data from Coinglass shows that the open interest of BNB on perpetual swaps has exceeded $460 million. Shiliang Tang, the chief investment officer at crypto investment firm LedgerPrime, expressed his view that BNB trading appears to be a “very short-term bet” due to the steep fee speculators are paying to keep their positions open. He also noted the difficulty in shorting BNB on the spot market due to a lack of liquidity.

Currently, BNB, the fifth largest cryptocurrency in terms of market cap, is trading just above $239, experiencing a decline of nearly 2% in the last 24 hours. On July 14, BNB briefly reached $260 when most altcoins rallied following a significant ruling in the Ripple lawsuit against the SEC.

The SEC filed a lawsuit against Binance last month, accusing the exchange and its CEO of operating an illegal exchange, broker-dealer, and clearing agency in the United States. The regulatory agency also alleged that Binance misrepresented its trading controls. Binance has vehemently denied all accusations made by the SEC, claiming that the agency’s claims are unsubstantiated.

The increased regulatory scrutiny initiated by US regulators has led many banking partners to withdraw their support from Binance amid the uncertainty, limiting the exchange’s ability to deposit and withdraw fiat money. Binance is not the only exchange facing regulatory heat in the US; Coinbase, the largest US-based exchange, is also currently embroiled in a legal battle with the SEC, which may have significant implications for the future of the crypto industry in the country.


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