Binance CEO Controversial Move: Selling Bitcoin to Save BNB?

The ongoing crackdown by the US Securities and Exchange Commission (SEC) on the crypto industry has taken its toll on Binance, one of the largest exchanges in the market.

The SEC recently filed a lawsuit against Binance.US, which resulted in a massive drop in the value of Binance Coin (BNB). BNB is down over 23% in the past week alone, currently trading at $238.

Binance CEO Sells Bitcoin

as told by NewsBTCBNB is facing a potentially catastrophic situation following an exploit on Binance Bridge, the Binance Smart Chain. This exploit could liquidate $200 million on the Venus Decentralized Autonomous Organization (DAO) if the BNB price drops to $220.

Given these developments, reports now suggest that Binance and its CEO, Changpeng Zhao, sold spot bitcoin (BTC) to prevent BNB from falling to $220. The move has been taken to protect against liquidation of BNB at this key level, but it also limits bitcoin’s upside potential.

The practice of selling spot bitcoin to buy BNB, known as a “liquidation waterfall,” is a common strategy used by exchanges to protect their users from significant losses. BNB was bought as soon as spot bitcoin was sold, helping to defend the $220 liquidation level. However, this also puts a cap on the upside potential of bitcoin as selling pressure increases on bitcoin.

According For crypto trader “JW”, Binance and CZ have been selling spot bitcoin at alarming rates to support BNB, as seen in the chart above, resulting in a drop in the value of bitcoin. While the move could help protect against liquidation of BNB, it could potentially have a negative impact on the broader cryptocurrency market.

Furthermore, despite positive economic news from the US, bitcoin is struggling to break above its newly formed resistance at $26,400 and is currently trading at $25,800. The US Consumer Price Index indicates that the country’s inflation is slowing, creating a more “comfortable” economic environment.

However, growing concerns over a regulatory crackdown and alleged selling pressure from Binance and its CEO have resulted in the selling pressure preventing the largest cryptocurrency from continuing its bullish trend.

Bitcoin Analyst Expects Drop to $24,000

According According to cryptocurrency analyst Michael Van de Poppe, bitcoin is currently facing an important resistance level at $26,400 and has been unable to surpass it. As a result, Van de Poppe expects markets to head lower at the Federal Open Market Committee (FOMC) meeting, which is scheduled for tomorrow.

Van de Poppe’s analysis suggests that the bitcoin price could experience some downside pressure in the near-term. However, he also sees this as an opportunity for traders to buy into the market at low prices.

The area around $24,500-$25,000 is an important support level, and if bitcoin price drops below this mark, it could present an attractive buying opportunity for investors.

Featured image from iStock, chart from TradingView.com