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Traders Aggressively Short BNB in Perpetual Futures, Here's Why

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By Christian Webster - - 5 Mins Read
BNB coin placed on a smart phone screen
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BNB coin placed on a smart phone screen



Things aren't looking good for Binance BNB, as data shows the massive shorting that has been going on with the token. In the futures market, the market outlook for BNB is very poor as it shows traders' belief in the profitability of the time has gone down.


In their large numbers, many are shorting the token, with expectations of a bearish trend. On their own part, the parent company behind the BNB token has been facing many battles ranging from layoffs to legal issues. 


Data provided by Coinglass show open interest and volume-weighted funding rates have gone to new lows in the perpetual futures market at -0.18%. This is the lowest this metric has gone down since April. This data simply means those shorting the Binance BNB token are more hopeful that the price will continue decreasing. In other words, they are continually betting on the bearish trends of the BNB token. Pear Protocol's pseudonymous co-founder Huf, talked about the situation, saying that "BNB is being heavily shorted. 


BNB perpetuals funding rate chart


He also mentioned what he thought was the reason behind the incredible drop in price. According to him, the recent shorting happening to token only worsened due to their current fragile situation. Their legal issues with the government and the exit of top executives are affecting the token.


"The sentiment has worsened due to the recent high-profile staff exits, inconsistencies related to BCH withdrawals from Binance.US and the pending Department of Justice case against Binance's CEO Changpeng "CZ" Zhao," Huf said. 

More Bad News Ahead? 

Currently, it appears that Binance is facing ongoing issues. A few weeks ago, they were faced with a hefty lawsuit from the Securities and Exchange Commission, resulting in 13 charges. Recently, there have been rumors and confirmations of some of the company's top executives leaving. It has been alleged that they departed due to discomfort with how Changpeng Zhao was handling their legal battles. 


The company has also been hit with many employee layoffs, which is said to have reached more than 1,000 in recent weeks. However, the company's CEO, Changpeng Zhao, tried to calm the situation by saying the crypto exchange was still hiring.


"We are still hiring," CZ tweeted on Saturday. 


But not many are swayed away by the CZ announcement. Pseudonymous trader Skew tweeted, "24h APR -92% ~ Typically, these readings precede some bad news for Binance Wonder what's coming?" 

A Short Squeeze in Sight? 

In the case of Binance, which has seen too many shorting in the perpetual futures market, there's just this chance or potential that it might witness a short squeeze. A short squeeze in the crypto market means that there's a chance that those betting on bearish positions will change it to make the token price increase. 


BNB price chart
BNB chart (Coinglass)


According to a pseudonymous trader, Skew, Binance BNB moving above $265, could see some short covering. But if the token fails to break this level, there might be more bad news for BNB.


"BNB [looks] Weak as long as price trades below $265, back above there, I could see some illiquid short covering rally. Else eventually below the monthly range low $218," Skew said.