Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
Binance’s ecosystem has been at the receiving end of an unrelenting regulatory pushback in the first quarter of 2023, casting serious concerns on the future of one of the largest entities in the crypto-space.
The latest salvo directed at the crypto-behemoth was the lawsuit by U.S. Commodity Futures Trading Commission (CFTC), accusing the exchange and Founder Changpeng Zhao (CZ) of violating local compliance rules to expand its business.
Earlier in February, Paxos, the issuer of the Binance branded stablecoin BUSD, was directed by the New York Department of Financial Services (NYDFS) to stop minting new tokens. The action, according to the regulator, was brought about by “several unresolved issues related to Paxos’ oversight of its relationship with Binance.”
The impact of these crackdowns has been severe. According to a report by crypto-market data provider Kaiko, Binance lost 16% share of global trading volume in Q1 2023 . The lawsuit-induced FUD resulted in a radical shake-up of its exchange reserves with users withdrawing funds for self-custody.
Moreover, the net stablecoin outflow reached -$295 million/day recently, which was the largest net outflow in the history of the world’s largest crypto-exchange. Stablecoin liquidity is one of the most crucial parameters to gauge the health of a crypto-trading platform.
The future course for Binance and its native token Binance Coin [BNB] is shrouded in uncertainty. And, most of the investors and analysts in the space would be busy understanding the dynamics to make informed decisions going forward. We, at AMB Crypto, tried to get some help from an unlikely ally – ChatGPT
Read Price Prediction for Binance Coin (BNB) 2023-24
ChatGPT – the new sensation
Ever since it burst onto the scene, ChatGPT has become a rage, revolutionizing the way humans interact with AI. People have flooded the AI-powered chatbot with a plethora of use cases to get assistance for literally anything. Right from finding a bug in a code, asking philosophical questions about life, getting dating advice, and even writing full-fledged media articles (not this one though).
Put simply, it functions like a conventional chatbot that we have encountered on the customer support section of different e-commerce companies. However, the big difference here is that the communication is more conversational, or to put it in a different way, more human-like.
Well, this is because it has been trained using reinforcement learning from human feedback (RLHF). This helps it understand instructions and generate nuanced responses.
But cryptos? Binance? Are we stretching the limits of ChatGPT? Let’s see.
Will Binance move out of the U.S. market?
Binance is not new to compliance-related issues in the U.S. In 2019, it ceased to operate in the country and launched a separate exchange, Binance.US, its American arm.
The platform’s structure is quite similar to the fallen FTX in the sense that a major part of its administration is being controlled from outside the U.S. Hence, it has always been under the radar of the regulators.
We started to test our AI friend by posing this very sweeping, although controversial, question. Now, the ability of ChatGPT to express itself is hindered because of the restrictions imposed by the creators. To make it speak its mind, we used the “jailbreak” hack.
As is evident, ChatGPT refused to make it a Binance v. U.S. government binary and highlighted that the exchange’s woes are not limited to one market. It acknowledged that Binance is taking steps to correct its image but the future remains in uncertainty. It was quite fascinating to note that ChatGPT steered clear of making definitive statements, something which any expert or analyst in this space would’ve done.
On growing number of hacks on BNB Chain, ChatGPT says…
Apart from regulatory concerns, the ecosystem’s blockchain, BNB Chain, has gained notoriety for rising number of decentralized finance (DeFi) hacks of late. As per a report by ImmuneFi, a Web3 bug bounty platform, BNB Chain was the most targeted chain in Q1 2023 with 33 incidents of hacks and exploits.
Here again, we turn to our AI partner to know if hacks will be the undoing for Binance. This time, it seemed as if it was waiting for this question to be hurled at its end.
ChatGPT said hacks were ‘definitely a cause for concern’ and advised the developers to prioritize the issue as it may have a damaging effect not just on the adoption of the BNB Chain, but in the value of BNB coin as well.
Well, ChatGPT would be glad to know that its word of caution was taken seriously. To address the security loopholes, BNB Chain soon announced a hard fork which is scheduled to go live on 12 April.
Another thing which caught our attention was the use of BSC rather than BNB in the latest response. Now, it’s a known fact that Binance Chain and Binance Smart Chain are now collectively referred to as one entity – BNB Chain. This change was introduced in February 2022. However, ChatGPT continued to use BSC Chain.
This, because its knowledge cutoff date is September 2021, meaning that it will base its answers on the information available until this date only.
Will BNB survive the storm?
At press time, BNB was the third-largest cryptocurrency (excluding stablecoins) in the sector, with a market cap of more than $49 billion, per CoinMarketCap data. As a result, significant fluctuations in its value could create ripples in the broader crypto-market.
BNB commenced a bullish cycle at the start of 2023, something that has helped it in gaining 27% on a year-to-date (YTD) basis. However, recent hiccups have applied brakes on its momentum. Since the CFTC lawsuit, the coin has shed 4.5% of its value.
Although setting unrealistic expectations amidst this FUD is not the most sensible thing to do, we tried to put ChatGPT under a bit of pressure. We asked whether it sees BNB touching $350 in 2023 given the current state of uncertainty. And, it impressed again.
As was the case earlier, it didn’t give a definite value or a price range, which was its USP. Or else it would have felt like a soothsayer predicting the results of FIFA World Cup matches, like ‘Paul the Octopus.’
In a very measured way, it outlined factors like market trends, technological developments, and regulatory changes, which will eventually decide the course of any coin. It also called attention to Binance’s strong DeFi ecosystem which could support BNB’s price in the long run.
Enough of the AI praising! Needless to say, it isn’t practical to only depend on what an AI tool says when it comes to price predictions and markets. There is nothing like getting the insights of real world experts. Therefore, we got in touch with Marius Grigoras, Chief Executive Officer at BHero and a crypto-expert, to help us out with the same question that we asked to ChatGPT. He stated –
“While I cannot give a certain answer on whether BNB will reach $350 in 2023, we must consider the general market dynamics. It’s evident that the recent regulatory crackdown has taken its toll on the entire crypto market, including BNB. But despite some fluctuations in price which may occur in the short term, I believe BNB possesses the resilience to rebound even stronger in the long haul.”
Did you find similarities between the human opinion and the AI opinion?
Is your portfolio green? Check out the BNB Profit Calculator
A look at BNB’s daily price chart
As is evident from the chart, March tested the coin’s ability to its limits, first during the USDC depegging-induced chaos and then the CFTC lawsuit. Over the last week, it moved within a range.
The Relative Strength Index (RSI) hovered along the neutral level, in tune with the sideways movement the price has made. However, the On Balance Volume (OBV) trended upwards, which meant that an accumulation phase was underway and the price may breakout of the range in the northward direction.
The Moving Average Convergence Divergence (MACD) was below the signal line, implying that bearish forces were still at large.
BNB’s Open Interest (OI) or the total dollar value locked in unsettled contracts on Futures exchanges was $308.7 million. The same saw a marginal drop of 0.54% over the last 24 hours, as per Coinglass. Since the CFTC lawsuit, the OI has declined by 12%.
The funding rates across most exchanges seemed to be in green though, indicating the dominance of bullish traders.
Additionally, traders positioning themselves for price gains increased vis-à-vis those looking for price losses, as the Longs/Shorts Ratio hiked to 1.25%.
It’s important to note that these indicators fluctuate on a day-to-day basis and can take a wild turn in no time. Therefore, the next course of action for BNB is tough to predict. Only time will tell whether it will manage to weather this storm.