Crypto markets have recently dropped to their lowest prices in three months, reversing most of the gains following Trump’s U.S. presidential victory. Bitcoin had been holding up relatively well until the $92,000 level, which had been holding as support since November 2024, was broken. The price then rapidly fell to $80,000, where it found support.

Sentiment in the crypto market has been weakened, as signified by the Crypto Fear and Greed Index, which has dropped from a level of 55 (Neutral) to as low as 10 (Extreme Fear) in the last month. It is currently at 34.

Crypto’s high correlation to traditional markets means bitcoin and wider crypto asset prices have also been affected by the uncertainty around tariffs and what they could mean for the U.S. economy in the immediate future.

Furthermore, crypto-specific events, such as the fallout from the recent Bybit exchange hack, which has been described as the biggest crypto heist in history, and record outflows from the spot bitcoin ETFs, have also contributed to the recent fall in crypto asset prices.

The recent announcement by Trump that the U.S. would be moving forward with the creation of a strategic crypto reserve provided a boost to crypto asset prices, with bitcoin rallying back up to the $95,000 price level. However, despite Trump pledging to stockpile bitcoin and other crypto assets, it is not fully clear yet how such a reserve will work, how it could benefit taxpayers, and if there will be any future crypto asset purchases. This uncertainty has caused a pullback in the price of bitcoin, which currently stands at around $90,000.

In my opinion, we are now at a crossroads. Loosening financial conditions could mean crypto assets and wider risk asset prices go higher from here. U.S. Treasury Secretary Scott Bessent recently reaffirmed the administration’s plan to bring down interest rates to help struggling Americans. However, further noise around tariffs or the crypto reserve plans not meeting the community’s expectations could cause bitcoin’s price to drop further. We’ll have to see which narrative proves to be stronger over the weeks and months to come.

Generally, we see retracements of 20-35% in bitcoin bull markets before a base is found and the next leg higher begins. The $80,000 level which the price of bitcoin recently fell to is a decline of 28% from the $109,300 all-time high, so there is a chance we may have already seen the low.

On the other hand, if the price were to fall further due to the reasons mentioned above, a 35% decline from the all-time high would put the price at $70,000 before any base is potentially formed and the next leg higher begins.

While I understand that investors may feel fearful due to the large price movements, retracements in the price of any asset class or instrument are normal and expected, and we should remember we’re still significantly up from this time last year.

Investors with ready cash and who have a long-term conviction in bitcoin may see this as an opportune time to add further to their overall holdings.

- Simon Peters, global crypto analyst, eToro

Many investors dismiss BNB as simply "the Binance coin," but that designation fails to recognize its broader value unlocks. While BNB was initially launched as the native token of the Binance Chain (now the BNB Smart Chain), and its early token burns were tied to Binance’s quarterly profits, BNB is evolving into a decentralized asset with multiple use cases and reasons for economic value.

While BNB may enjoy some value accrual from the expansion of Binance, its token supply model and the development of the BNB Chain offer two independent sources of value. First, BNB serves as a store of value through quarterly and fixed-ratio BNB burning mechanisms. Second, it powers smart contract functionality via the BNB Smart Chain, which has become a growing hub for DeFi and gaming applications.

Deflationary store of value

BNB’s burn mechanism differentiates it from almost every other cryptocurrency. Let’s compare BNB to BTC, ETH and SOL:

BNB’s burn process is unique; it removes tokens from circulation based on the number of blocks produced and average price each quarter, as well as having a fixed ratio of the gas fees accumulated in each block. Nearly 60 million BNB (~$35 billion at current prices) has been burned so far, reducing the circulating supply to 142 million. The last quarterly burn alone wiped $1 billion worth of BNB from existence — a 4.6% annualized deflation rate!

Bitcoin currently commands the most attention as a store of value asset because of its first mover advantage, market cap and a robust, decentralized network of miners. Any change in the Bitcoin code (i.e., changing the target supply) would need to be agreed upon by the majority of the network, which would prove exceedingly difficult with bitcoin's level of decentralization. Investors should note that the BNB burn has already been modified from its original whitepaper so there is no guarantee it won’t be changed further. This is the tradeoff with an aggressive token burning strategy.

Source: bnbburn.info

BNB Chain – a modular L1 ecosystem

BNB’s next evolution is the BNB One Chain Initiative, which aims to unify a multichain ecosystem built for Web3 interoperability:

With several headwinds facing Ethereum (namely layer 2 fragmentation and inflationary concerns), BNB’s One Chain Initiative provides a viable alternative to developers and web3 applications.

Now, it isn’t all rainbows and butterflies with BNB. Investors should still consider the risk that their decentralization push is only a marketing stunt, as well as the ongoing regulatory battles over Binance’s know-your-customer (KYC) policy and other issues.

With Richard Teng now at the helm of the exchange, Binance and BNB’s next chapter will likely be focused on compliance and working with regulators/exchanges to increase access for the BNB token. With BNB mostly unavailable on U.S. exchanges, the token has still achieved a ~$100B market cap with international support alone. As U.S. crypto regulations ease, BNB’s re-entry into U.S. markets could be a significant catalyst for further growth.

Disclosures:

Osprey Funds manages the Osprey BNB Chain Trust (OBNB), a single-asset Trust providing exposure to BNB and publicly quoted on the OTCQX Market. Investors can learn more and read the Trust prospectus at ospreyfunds.io. Matt does not own any BNB or OBNB.

- Matt Gerics, vice president, Osprey Funds

As always, get the latest crypto news from coindesk.com and market updates from coindesk.com/indices.