The fallout? A punishing “altcoin winter” that could slaughter altcoin valuations while bitcoin continues to trend higher.
Binance US Launch Could Trigger Brutal Altcoin Winter
That’s the shocking analysis of crypto economist Alex Krüger, who warns that Binance’s decision to launch a regional US exchange and boot US traders from its core platform could fundamentally reshape the global cryptocurrency market.
Binance, as CCN reported, has partnered with BAM Trading Services Inc. to launch Binance US, where it will directly compete against Coinbase (read more in CCN’s exclusive interview with Binance CEO Changpeng Zhao).
Concurrently, the world’s largest crypto exchange quietly updated its terms of service to bar US residents from accessing its core platform, Binance.com. Those changes take effect on Sept. 12.
According to Krüger, it’s likely that, due to stringent regulatory restrictions, Binance US will feature a much narrower range of crypto assets than are listed on its central exchange.
Since US traders make up as much as 30% of Binance’s user base, he expects small-cap cryptocurrencies listed on Binance but not the US exchange to suffer brutal corrections.
“#AltsWinter is coming,” he tweeted. “Good for $BTC and the majors.”
Binance Coin Risks Steep Sell-Off
Of particular concern is Binance Coin (BNB), the cryptocurrency exchange’s propriety token that it issued during its 2017 initial coin offering (ICO).
While the company maintains that it is a “utility token,” some analysts have argued that the Securities and Exchange Commission (SEC) would likely classify it as a security under US regulations.
That could prevent BNB, the seventh-largest cryptocurrency with a $4.6 billion market cap, from finding a home at Binance US.
If BNB does not receive a US listing, its price could crater. Already, the BNB price has plunged more than 7% in the hours since the dual announcements.
Altcoin Pain Will Ignite Bitcoin Gains
Bitcoin, meanwhile, has outperformed every top-20 cryptocurrency, rising more than 3% over the 24-hour period while most other assets flash red daily candles.
Krüger explained that the launch of Binance US and the risk that BNB and other altcoins might not receive a listing on the new platform should present bitcoin and other large cryptocurrencies with a welcome boost.
“If you hold ‘small caps’ in Binance, and are concerned about the news, maybe because you are a US resident who fears getting funds stuck without KYC, or maybe because you think ahead, yet want crypto exposure, what do you do?”
“Sell everything, buy $BTC (or $ETH), exit Binance.”
That, in turn, could provide the bitcoin price with crucial support as it struggles to extend its already-massive 2019 rally and push closer to a fresh all-time high.
Last modified: March 4, 2021 2:36 PM