Binance Coin (BNB) saw a slight 0.04% price decrease over the past 24 hours, with its value dropping from $216.78 to $216.69 as of August 20, 2023. Though a minor daily decline, examining longer term BNB price action reveals some notable trends.
Over the past week, BNB has seen a 0.39% price increase, bouncing back mildly from its recent downturn. However, zooming out further shows BNB remains deeply entrenched in an ongoing bear market. Over the past 30 days, BNB has plummeted 9.91%. Extending to 90 days sees losses of 10.38%. Going back 60 days reveals mammoth declines of 31.32%. And year-to-date in 2023, BNB has plunged significantly.
But it's not all doom and gloom for the number 3 ranked cryptocurrency by market capitalization. BNB still commands an impressive market cap of $36.11 billion. Its 24 hour trading volume reached $319.74 million, demonstrating strong interest in trading the asset. BNB also has a circulating supply of 166,801,148 BNB, giving it one of the lower supplies among top cryptos.
So what's driving Binance Coin's prolonged price slides in 2023? And could a recovery rally be forthcoming? Let's analyze some of the key factors impacting BNB's price action.
crypto">Macro Environment Remains Hostile for Crypto
The broader macroeconomic environment remains challenging for cryptocurrencies like BNB. Persistently high inflation and rising interest rates have pushed investors away from riskier assets. Stocks have declined substantially in 2022-2023, and crypto has followed a similar trajectory.
With inflation still running hot at 8.5% in the United States, the Federal Reserve has been aggressively hiking rates, taking the Fed Funds rate up to 2.25%-2.50% already. More rate hikes are expected through 2023 as the Fed tries to cool the economy and tame inflation.
Higher rates make holding assets like BNB less appealing versus lower risk fixed income investments. Until inflation shows meaningful declines, the macro backdrop may weigh on cryptocurrencies.
BNB Correlated With Broader Crypto Market
Cryptocurrencies have become highly correlated in their price movements, moving in tandem with Bitcoin and Ethereum price swings. As the broader crypto market has plunged in 2023's bear market, BNB has followed along.
Bitcoin remains 53% below its all-time high. Ethereum is still down 57% from its peak. And BNB has seen similar percentage drawdowns, trading 69% below its own all-time high.
With crypto prices highly correlated, BNB may struggle to diverge meaningfully from broader industry price action. A recovery in Bitcoin and Ethereum prices may be needed to lift BNB out of its rut.
Reduced Risk Appetite Compounds Bear Market
Investor risk appetite has declined substantially in 2022-2023 with volatility spiking across assets. Crypto's reputation as a higher risk asset class has caused it to underperform traditional stocks and bonds.
More risk averse investing has manifested across financial markets. The CBOE Volatility Index, or VIX, has shot higher by 68% year-to-date. Bitcoin's volatility has also increased, negating some of crypto's appeal as an uncorrelated asset for portfolio diversification.
Until investor risk appetite improves, the crypto bear cycle could persist. However, if inflation and volatility show signs of declining, riskier assets like BNB could benefit.
Binance Leadership Turmoil Creates Uncertainty
Internal turmoil and regulatory pressure on Binance, BNB's parent company, has sparked some uncertainty around the crypto's outlook.
Alleged insider trading by Binance CEO Changpeng Zhao led to a November 2022 probe. And mounting regulatory scrutiny of Binance worldwide has created reputational challenges.
Though Binance is working to strengthen compliance, investigations and leadership uncertainties have introduced risks for BNB specifically. However, if Binance can emerge from recent scrutiny with its reputation intact, it could refocus efforts on developing valuable use cases for BNB.
BNB Use Cases Provide Long Term Hope
Despite its severe bear market drawdown, BNB retains substantive real world utility that could drive a long term recovery.
As the native token of the Binance Smart Chain, BNB facilitates transactions and serves governance functions on one of crypto's most adopted layer 1 blockchain networks.
BNB also yields rewards for Binance exchange users. And features like discounted trading fees give BNB intrinsic value.
BNB's use cases remain viable despite its struggling price. So in the eventual crypto recovery, BNB could be poised to bounce back stronger than competitors with less real world utility.
BNB Price Prediction
Despite ongoing macro headwinds, BNB could be approaching oversold territory after its lengthy bear market. Short term upside appears limited barring a sudden improvement in risk appetite.
But long term, BNB has key ingredients like strong adoption and use cases that could catalyze tremendous upside during the next bull run. Once bearish pressures abate, a measured price target for BNB could be a recovery to the $500 level, representing potential upside of around 130% from current levels.
Is Binance Coin's Bear Market Nearing an End?
Binance Coin has plunged deeply into bear market territory in 2023 as part of the broader crypto sell-off. Its substantial 70% drawdown from all-time highs may have BNB looking extremely oversold currently.
Given the extreme price weakness observed, the question arises of whether BNB may be bottoming as the bear market reaches maturity.
On the one hand, ongoing macro headwinds from inflation and rising rates could continue weighing on the crypto sector. This would delay any sustainable BNB upside.
However, bear markets historically do not last forever. Once the Fed tames inflation and potentially pivots to cutting rates, risky assets could recover.
BNB's solid adoption and real world use cases could then propel a powerful trend reversal. And with BNB's circulating supply relatively lower, price spikes to the upside could be magnified.
Overall, while more downside cannot be ruled out, BNB seems to be approaching peak bearish sentiment. The risk-reward for long term investors appears skewed positively.
Will Regulatory Clouds Over Binance Lift Going Forward?
Binance, the world's largest crypto exchange and issuer of BNB, has faced increasing scrutiny from global regulators in 2022-2023. Allegations of insider trading and lax anti-money laundering controls have put pressure on Binance.
This regulatory uncertainty has likely contributed to BNB's bearish price action as risks specific to Binance get priced in.
However, Binance has shown a willingness to improve compliance, even at the expense of restricting certain services. If Binance can satisfy regulators' concerns going forward, it may resolve a key overhang for BNB.
Removing the regulatory clouds could refocus the narrative on BNB's strong utility and adoption fundamentals. While regulatory risks persist, Binance's actions suggest it appreciates the need for reform.
Long term, if Binance achieves compliance benchmarks, BNB could rebound powerfully as uncertainties fade. But additional near-term restrictions imposed on Binance cannot be discounted either.