Will BNB Hold The Line Amid Sanctions Accusations?

BNB stands at a key technical level, and falling below could have serious implications for the whole crypto ecosystem.

Opinion image: Head with machinery inside

Following the collapse of FTX last year, attention naturally shifted to the world's largest crypto exchange. Like FTX, Binance is a huge organization that exists outside of a clear regulatory framework, whose business practices are often opaque, and which has its own token, BNB.

Just as the FTT token was the canary in the coal mine for FTX, so critics are suggesting that BNB's current price action might herald serious problems for the exchange.

Not that it's short of issues already. There are multiple lawsuits under way from the CFTC and SEC, for both Binance and CEO Changpeng Zhao (CZ). This week saw renewed accusations from the Wall Street Journal that the exchange has been handling Russian money. (Although Binance has said it complies with sanctions, WSJ claims that Russian users are able to complete peer-to-peer trades on Binance via several Russian financial institutions.) All of this scrutiny has led some of Binance's fiat partners to back out, leaving users with fewer ways to withdraw crypto to cash: An unenviable position for any exchange to find itself in.

Technical Risk

Having dropped 70% from its bull market high, BNB now sits just above the $200 line. This is a critical technical level, since the run-up in early 2021 saw the token jump 4x from $50, with no pause or pullbacks. There is no obvious support, meaning that should $200 break, BNB could plummet back to $50.

BNB chart, TradingView

That could have serious consequences for Binance and the wider crypto world, since BNB is so closely tied to the operation of the exchange—which is, in turn, of systemic importance to the crypto sector. BNB also plays a key role for altcoins in Binance's BEP20 ecosystem. Numerous critics have claimed (and not for the first time) that Binance is pulling out the stops to prevent any further decline in the price of BNB—putting downward pressure on BTC in the process.

CZ has explicitly denied that Binance is liquidating its BTC reserves to prop up BNB. There is also no evidence that they are misappropriating their customers' crypto, as FTX did, although that does not stop rumors swirling online. Nonetheless, Binance has its fair share of detractors, and it is facing real problems, as it sits squarely in the regulatory spotlight following the failure of FTX.

Regardless of whether Binance is supporting the price of BNB with its reserves, $200 is clearly a critical technical level for the token. Dropping below this would open the way to a further 75% decline, and serious pain for the wider market.

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