BNB regains 20% in one day because of few key reasons that we will see more about in our latest binance coin news today.
The price of BNB regains 20% in one day. The swift recovery came after a market-wide correction during which major cryptocurrencies like BTC and ETH saw a sharp decline. The ETH price declined from $2400 to a new low of $1900 in a sudden pullback as BTC dropped below the $60K support level to a low of $52,000.
The market saw a steep pullback in a very short period of time because the futures markets were overheated. Over $10 billion worth of crypto positions were liquidated in one day with BTC accounting for over $5 billion of it. Since the drop was more technical than it was fundamental, it was a cascade of liquidations that caused the pullback while the market pared most of the losses quickly. It was quite evident that the futures market led the correction because some of the biggest cryptocurrencies trading lower in the futures market than the spot market. Adam Cochran who is a partner at Cinneanhaim Ventures explained:
“I think what we saw was a cascade of tightly wound retail positions on a weekend market, get toppled, but somewhere along the line, there was a matching book fail that caused stop-losses to not get hit and when that happened it put a massive $63M position in jeopardy.”
#Binance team had an allocation of 40% of the total supply of #BNB from the ICO days, which is worth just over $37 billion dollars at today's (dropped) prices. We have not sold a single #BNB so far, and never intend to. We will burn it all. More info: https://t.co/6YM7O7vqDZ
— CZ 🔶 Binance (@cz_binance) April 18, 2021
He added that the liquidation of the $63 million positions shocked the market which put the rest of cryptocurrencies at risk of a drop. Cochran added:
“That $63M position getting liquidated is what put the market in major jeopardy, but by that time there was already degraded performance issues connecting to Binance and spiking gas fees. So there was very little way for anyone to backstop or arbitrage that liquidation.”
After the initial futures market-driven drop, the rest of the cryptocurrencies that have strong fundamentals started recovering first. While BTC and ETH rebounded fast by 12% and 15% from their lows, BNB outperformed both ETH and BTC in the past 24 hours. The strong performance of BNB stems from two main catalysts: the record $600 billion token burn by Binance and the rise of the Binance Smart chain metrics.
Binance burned $600 million worth of BNB in the first quarter this year which reduces the circulating supply and suggests that the exchange generated about $750 million in quarterly profits. What’s even more to it, Binance CEO Changpeng Zhao emphasized that the exchange’s team has no plans to sell their BNB holdings and 40% of the total supply in a dig at Coinbase insiders selling $5 billion worth of COIN shares last week. When the market recovered, BNB saw a strong rally as a result of a delayed response to the latest $600 million burns.
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