Binance Coin [BNB] experienced the highest increase in value among the top ten cryptocurrencies based on market capitalization, rising by over 5% in the previous 24 hours.
At the time of writing, BNB was being traded at $533, marking a significant rise from its lowest point of $503 within the same timeframe. Despite these positive advances, BNB faced the risk of a potential shift towards a bearish trend if the current positive market momentum failed to be sustained.
Can BNB Maintain Its Bullish Trend?
The price movements of BNB have closely mirrored those of Bitcoin [BTC]. Consequently, the ability of this digital asset to uphold its recent gains is contingent upon the broader cryptocurrency market’s ability to maintain its optimistic outlook.
An analysis of BNB’s daily chart revealed the potential of a bearish divergence. Although the price was on an upward trajectory, technical indicators suggested that the strength of the uptrend was waning following the formation of a double-top pattern on the daily chart.
In late July, BNB reached its initial peak after a surge from below $500 to challenge a critical resistance level at $600. Subsequently, a downward trend emerged, forming a support level at $464.
The uptrend resumed but faltered after hitting $600 once more.
A conclusive bearish breakout for BNB would occur if it dips below $464. However, this pessimistic scenario could be overturned if the ongoing bullish trend persists and BNB manages to breach the resistance level set by the second peak.
With the Relative Strength Index recording a value of 47, it indicated that sellers retained control of the market despite the recent gains. For a confirmation of bullish momentum and the negation of the double-top pattern, the RSI line must cross above the signal line.
Another sign of a weakening uptrend was observed through the Directional Movement Index (DMI). The positive Directional Indicator (blue) continued to lag behind the negative Directional Indicator (orange), hinting at a potential bearish reversal.
Insights from Hyblock Capital highlighted a concentration of liquidations around $548. Consequently, this level might pose a significant resistance barrier as traders who participated in the upward surge might opt to capitalize on profits as BNB nears $548 to mitigate potential losses.
Declining Usage on the BNB Chain
The BNB Chain has reported a decline in usage, further complicating BNB’s prospects for a sustained rally.
Data from DappRadar revealed a 25% decrease in the number of unique active wallets on the network over the past week. Additionally, trading volumes plummeted by over 30%, dropping from approximately $850 million to $350 million.
This decrease in network utilization might reflect a diminished market interest in BNB.
Statistics from Coinglass indicated that BNB’s Funding Rates have predominantly displayed negative values in the last month, signaling a prevailing bearish sentiment among traders.