According to data on CoinGlass, funding rates for Binance’s BNB tokens have fallen to the lowest levels in three months. Open interest and volume-weighted funding rates have now fallen to -0.18%, the lowest figure since late April 2023. Open interest is the number of remaining derivative contracts that have not been settled. Meanwhile, the volume-weighted funding rate measures the price of an asset adjusted for its volume.
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According to the data, short positions are becoming dominant. Short trades are bets that profit on price drops. Moreover, traders are willing to pay longs in order to keep their short bets open.
Perpetual futures traders for BNB seem to have turned bearish on the token as Binance is engulfed with challenges.
Why are traders bearish on Binance’s BNB token?
Huff Haus, the co-founder of Pear Protocol, also noticed the development and stated that Binance’s “BNB is being heavily shorted.”
Haus pointed to three developments that may have hurt investor sentiment. First is the recent exit of high-profile staff members. Three senior executives quit their roles at Binance earlier this month. Haus also highlighted the inconsistencies with withdrawals related to Bitcoin Cash (BCH) from Binance.US as another reason. And thirdly, he believed that the ongoing Department of Justice investigation against CEO Changpeng “CZ” Zhao. The exchange is also facing a lawsuit from the U.S. Securities and Exchange Commission for the alleged sale of unregistered securities.
The three executives cited CZ’s handling of the DOJ investigation for possible money laundering as the reason for their resignation. Binance has also laid off around 1000 employees in recent weeks. The layoffs could be due to the exchange taking steps to cut operational costs.
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Nonetheless, CZ addressed the layoffs, saying that they were “involuntary terminations.” Moreover, he has stated that Binance is still hiring. At press time, BNB was trading at $243.38, down by 2.3% in the last 24 hours.