The impact of the recent crypto market crash is still reverberating in the industry, with Binance’s Coin (BNB) falling to its lowest value in over a year. Market observers speculated that Binance prevented the coin’s value from falling below a certain threshold.
Before Bitcoin’s August 17 flash crash, BNB traded above the $240 range despite Binance’s legal tussles across several jurisdictions. However, the prevailing market condition sent the asset’s value to a yearly low of $215 on August 19.
Why is BNB Price Falling?
BeInCrypto identified a bearish trend in BNB’s price movement in July before this is its eventual crash. A separate report further noted that the exchange token’s funding rates have fallen into negative territory.
Over the past year, BNB has faced significant headwinds attributed to the issues facing Binance. In June, the U.S. Securities and Exchange Commission (SEC) classified the asset, alongside its sister Binance USD (BUSD) stablecoin, as a security in its lawsuit against the crypto firm.
While Binance vehemently rejected this label, the demand for BNB has greatly suffered as investors tend to avoid assets lacking regulatory clarity.
BNB price decline can also be linked to the decreased on-chain activity on Binance Smart Chain, a layer1 smart contract blockchain.
DeFi activities have drastically dropped, with weekly exchange volume dropping to $2.34 billion from a peak of $24.70 billion, per DeFillama data. Additionally, the total value of assets on the network has fallen by 87% to $2.84 billion, according to DeFillama.
This signifies that the reduced network activity on the BSC resulted in diminished demand for BNB, the platform’s native asset.
CZ Says Market Determines BNB Price
In an August 19 tweet, Binance CEO Changpeng ‘CZ’ Zhao said market forces determine BNB’s price.
CZ responded to market observers speculating that Binance was heavily defending BNB’s price from falling below $212. However, CZ questioned the reasoning, pointing out that “BNB’s price is determined by the market.”
Meanwhile, this is not the first time Binance has been accused of propping BNB’s price. In June, CZ denied allegations that his exchange was selling Bitcoin to protect the exchange token.
BNB prices slightly gained 0.18% on the day to trade at $216.40 at the time of writing.
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