In June 2023, the BNB exchange rate experienced significant fluctuations. Initially, it fell by 27% and then rose by 10%. Investors remain perplexed about what to do with their assets, while Binance management assures that the BNB situation is under control.
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BNB Technical Analysis
From April 17 to June 12, 2023, BNB saw a decrease in its value by over 37%. It is interesting to note that more than 27% of this decline occurred in just one week, from June 5 to 12. This was due to active selling of the cryptocurrency by investors, prompted by a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Binance.
Throughout this process, the Open Interest, an indicator reflecting the total number of futures contracts at the end of the trading day, continued to increase.
Meanwhile, starting from June 10, the Weighted Funding Rate fell below zero. This means that sellers were willing to compensate buyers for holding open short positions.
The situation developed in such a way that the number of BNB futures increased, while sellers dominated the market, indicating a likelihood of further decline. Another factor confirming this trend was the sale of Binance cryptocurrency by large market participants. Network analyst Lookonchain revealed that one major player, who had not taken any action for two years, sold 10,000 BNB for a total of $2.3 million.
There were rumors that Binance CEO Changpeng Zhao (CZ), known as CZ, personally initiated the sale of the cryptocurrency. However, CZ later denied these rumors, calling them manifestations of FUD (fear, uncertainty, doubt).
From a technical analysis perspective, the situation is complex. On June 12, BNB reached its local minimum at $220.4, coinciding with the December 2022 lows. In other words, the coin reached a support level. After that, it rebounded from this level and grew by nearly 10% (the price at the time of writing the article on Monday, June 19, was $242).
| Date | Price |
|---|---|
| June 12 | $220.4 |
| June 19 | $242 |
The next target should be the resistance level of $252.8. However, a "death cross" has recently formed on the chart, where the faster 50-day moving average (indicated in purple) crossed over the slower 200-day moving average (indicated in green) from top to bottom. This is usually considered a sign of a "bearish" market.
Luban Update
The Luban update was activated on June 11. Luban offers three improvements:
- BEP-126;
- BEP-174;
- BEP-221.
Special attention was given to the first one within the Binance Chain:
"The long-awaited update introduces the Fast Finality mechanism. With Fast Finality, block reorganization is a thing of the past. What does this mean for you? Enhanced protection against double-spending attacks and MEV reorganizations, transaction irreversibility after confirmation, and efficient operations for exchanges and DeFi protocols. While BEP-126 does not directly speed up transactions or reduce fees, the update contributes to maintaining the security and reliability of the BNB Chain ecosystem."
The Fast Finality mechanism essentially accelerates block formation. It is quite useful: users can ensure they receive reliable information from the last completed block and make decisions accordingly.
Layer 2 Blockchain
On June 15, the BNB Chain team posted a 17-second video on their official Twitter page. In it, they announced that users would soon witness the full power of their blockchain with the upcoming release of a Layer 2 solution. The video mentions that the Layer 2 solution will increase throughput and make transaction processing more cost-effective. The solution is already being tested.
Industry experts speculate that the Layer 2 solution will help solve the scalability issue in the long term. Many are facing this problem. New solutions are expected for decentralized applications (dApps) and decentralized finance (DeFi) projects.
In summary, life within the Binance Chain continues to be dynamic. The Luban update has been released, and the implementation of the Layer 2 blockchain is on the horizon. However, the price of BNB is in a bearish trend, and investors continue to experience anxiety due to the SEC lawsuits against the world's largest cryptocurrency exchange.
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