Binance destroys $391mm worth of BNB tokens, but bearish risks sustain

Binance, Binance destroys $391mm worth of BNB tokens, but bearish risks sustain
Photo by Jp Valery on Unsplash

Key Takeaways:

  • Binance, the world’s largest crypto exchange by volume, completed its 16th quarterly Binance Coin (BNB) burn.
  • However, the decline in supply did not avert BNB’s bearish forecast, as its prices continue their movement in a bearish triangle pattern.
  • Lithuania and Hong Kong latest to impose censures on the crypto exchange.

NEW DELHI ( — On July 18, Binance announced the completion of its 16th quarterly BNB (Binance’s native cryptocurrency) burn event.

The world’s largest cryptocurrency exchange (by volume) reported destroying 1,296,728 BNB tokens, valued at $393.6 million. In addition, the exchange also burned 5,163 BNB via its Pioneer Burn Program (an initiative to help users who have lost digital assets due to honestly mistaken transactions).

In cryptocurrency, burning is the process of intentionally destroying digital currencies by sending them to unusable accounts. As such, any digital asset sent to such addresses cannot be recovered or reused. Thus, burning is similar to share buybacks in traditional finance.

Binance burns around 20% of the exchange’s profit every quarter, suggesting the crypto exchange earned nearly $2 billion in 2021’s second quarter.

After a burn event, the cryptocurrency’s supply declines, which increases its relative scarcity. Ideally, that means the BNB price expects to move higher after every burn event. However, it seems the cryptocurrency may not follow the trend this time around, at least immediately.

BNB prices have moved upwards following a burn event in the past. For example, after the 13th BNB burn event on October 16, BNB prices gained 64.7%, going from October 16’s low of $29.296 to January 19’s high of $48.257. Similarly, January 19’s burn event propelled BNB upwards by 1,461.5%, from January 19 low of $41 to April 12’s high of $643.

Binance Coin price trends and recent burn events. Source: BNBUSD on
Binance Coin price trends and recent burn events. Source: BNBUSD on

BNB reached its ATH of $704 following the exchange’s 15th burn event on April 16. However, BNB prices are currently trading in a bearish symmetrical triangle pattern.

The symmetrical triangle is a chart pattern that occurs when the price action trends sideways. Though the pattern is neutral, a breakout usually occurs in the direction of the overall trend.

The downward moving prices, combined with decreasing volumes, highlight the BNB’s bearish outlook. Support for BNB currently lies at the $275 price level. If BNB breaks below it, the next support level at $251 comes into play. However, a decline to the next support level will mean a 14.3% fall from current prices.

Related: Bitcoin week ahead Ep12: Bearish pressure all the way

Immediate resistance on the daily chart lies at $305. If BNB breaches it, the resistance will flip into support. Once that happens, bulls will target the next resistance at $318.

The Binance cryptocurrency is trading below its 50-Day (Yellow) and 100-Day (Violet) Moving average trend lines, which indicates the token is bearish in the short and mid-term ranges. In addition, while BNB was trading above the 200-Day (Green) MA line, prices fell below it today. The move may indicate the beginning of a bear run in long-term

BNB oscillators on the daily chart. Source: BNBUSD on
BNB oscillators on the daily chart. Source: BNBUSD on

MACD for BNB is in the bullish region for now. However, the MACD line (difference of 12-Day and 26-Day EMA) seems poised to move below the indicator’s signal line (9-Day EMA of MACD). The MACD Histogram confirms the move, as its bars move towards zero. Hence, MACD is on the brink of forecasting a bearish trend reversal for Binance’s in-house crypto.

RSI for the digital asset remains neutral at 40.64.

Meanwhile, The Regulator’s Crackdown Continues

Binance’s battle with finance regulators around the world continues. Lithuania and Hong Kong are the latest to add to Binance’s woes.

Lithuania’s central bank alleged a Binance payments affiliate provided ‘unlicensed investment services‘ in the country. In addition, CONSOB, the Italian market regulator, released a warning against Binance on July 15. The regulator stated that it did not authorize Binance Group to provide investment services in Italy. Furthermore, they warned investors to exercise the utmost caution in transactions related to crypto-assets.

Related: BNB’s bullish exhaustion visible as Cayman Islands question Binance’s legal status.

Hong Kong market regulators cracked down on Binance’s stock tokens trading program. Interestingly, the same program earlier faced scrutiny in the UK and Germany. Binance announced the shutdown of its stocks platform on July 16, a possible repercussion of Hong Kong’s warning about the service.

The global crackdown targets concerns over issues like consumer protection and securities rules.

As such, the increased scrutiny hinders Binance’s ability to link up with the traditional financial system. For example, the crypto exchange relies on conventional and regulated companies to allow customers to invest in the exchange. However, due to the regulators’ crackdown, firms might restrict customers from sending funds to Binance.

BNB prices not reacting to the burn event might be a result of the crackdown as well. At the time of writing, BNB was trading at $282.

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