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Saturday, December 4, 2021

Binance Coin: How Will Regulatory Troubles Impact It?

The price of Binance Coin increased by around 30% in the last two weeks, but the fourth largest cryptocurrency is still struggling. The cryptocurrency, with an extremely voluminous market cap, has been looking towards breaking into the resistance of $450. At the same time, the currency has been on top from the 3rd of June, which was soon followed by a price correction of 48%, which brought the price back to $225.

Now, since the situation is quite similar to earlier instances, several investors have plausible reasons to doubt the most recent performance, especially because Solana went on to reach a high on the 18th of August. 

The Binance Coin Perpetual Contracts Premium Has Vanished

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The previous month saw the shutdown on the trading of derivatives for the European as well as the Asian clients of Binance Coin- which soon added to the woes of the cryptocurrency. On the 18th of August, the Central Bank of Netherlands put out a warning to the cryptocurrency after realizing that the crypto exchange was providing crypto services to most of the local residents.

Now, the authority has stated that the company has not been acting in compliance with the Anti-Money-Laundering, as well as the Anti-Terrorist-Funding Act of the country. 

It should come as no surprise that the data derived from Derivatives will definitely provide some good insight into how professional traders, as well as whalers, have been positioned throughout Binance Coin. Although long and short futures contracts are still equally matched, the leverages that they apply would definitely vary. Therefore, by deciphering the funding rate of perpetual contracts, one would be able to determine how bearish or bullish an investor is. 

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The data provided does confirm that Binance Coin’s bearishness in the middle of July can be seen on the funding rate of the cryptocurrency- while the futures contracts in September highlighted a discount of 5%. 

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