News that the Department of Justice (DOJ) and the Internal Revenue Service (IRS) are investigating Binance has sent the Binance coin price sharply lower.
Already rattled by the broader sell-off in crypto markets, the Binance coin price has come under further pressure as the Binance exchange is under the scrutiny of US government agencies.
The IRS and DOJ have launched a probe into the exchange to focus on potential money-laundering and Tax violations by US citizens using the platform.
As of the time of writing, the coin is trading at $576 and lower by 6%, although 9.5% higher than the session low of $527.45
The extent of the probe isn’t clear. However, it is supposedly related to derivatives trades carried out on the exchange. These trades are said to have bypassed CFTC rules. US citizens are only permitted to carry out transactions of this nature with a CFTC registered firm.
The firm insists that it has operated within the rules, and it has a long history of assisting regulators.
The Binance coin price is likely to be reactive to headlines as the story unfolds.
Binance Coin Price Outlook
The coin has had a stellar start to 2021. Even in light of the current 24% drop from its highs. The Binance coin price is still +1,500% higher than where it started the year.
Obviously, there has been some profit-taking as longs banked gains. The question is, does this uncertainty send prices lower still?
On the daily chart, we can see that the Binance coin price bounced perfectly from an ascending trend line at $526.00. The trend links two previous lows from late April.
This looks to be a good level of support, and previous touches have led to a recovery in the coin price. A failure to hold this level could see the Binance coin price retreat to the $400 area.
At $397, the price will see support at a major trend line in place from February 2021. It seems odd to write this, but that trend starts from the $42.00 mark, and I consider it a significant indicator.
All things considered, I remain optimistic about the price and believe that traders will buy this dip. If the price holds the $526 support, it would suggest that the bullish momentum is still intact. Longs may look to place stops below this level as if it fails, the price is likely to leg lower.
Binance Coin Price Chart
Follow Elliott on Twitter.