Binance Coin (BNB), the cryptocurrency holding the fourth spot in terms of market capitalization, recently grabbed the spotlight following the release of its former CEO, CZ, who was detained for four months due to allegations of money laundering in the United States.
The news of his release triggered a surge in BNB’s market activity. The upsurge in Binance was accompanied by a spike in liquidations leading to an immediate local reversal across various BNB trading pairs.
This situation has brought up speculations regarding the likelihood of BNB undergoing a correction before its potential ascent in Q4, a period historically known for being favorable to the cryptocurrency markets.
An in-depth analysis of the BNB/USDT pair could offer some valuable insights into the future price movement.
BNB Upward Trend Continues for 3 Weeks
BNB/USDT has been steadily moving in an upward trajectory, establishing higher highs and higher lows consistently over the past three weeks. This uptrend can be observed on the 4-hour chart, providing a comprehensive view of both short-term and long-term price trends.
Recent market activity saw BNB reaching the $620 mark, hinting at a potential temporary halt in its upwards movement and a probable correction. The formation of a double top pattern around the $620 level suggests a potential retracement, which could be confirmed if the price breaks below the pattern’s neckline.
If such a breakdown occurs, BNB could correct down to around $560, or possibly even dip as low as $540, aligning with the average price movement over the past three weeks on the 4-hour chart.
The $560 price point coincides with the 0.382 Fibonacci Retracement level, often serving as a crucial support level during healthy market trends like the ongoing one.
Given the positive market sentiment for cryptocurrencies in Q4, a retracement towards $560 might present an attractive buying opportunity, potentially paving the way for BNB to climb to $800, offering a substantial 40% return on investment.
Analysis of Net Longs, Shorts Delta & Open Interests
Aside from BNB’s price movements, various metrics such as net longs shorts delta, open interest, and whale versus retail delta point towards a potential correction. These indicators, which had previously peaked at 100%, have recently receded, with the global average currently hovering around 82%.
The net longs shorts delta for BNB, which monitors the balance between buyers and sellers, has decreased from its peak and now stands at 86%, indicating a reduction in buyer momentum.
Furthermore, open interest has declined to 89%, further reinforcing the potential for a market correction.
The whale versus retail delta, tracking the buying activities of large holders versus retail traders, has witnessed a significant drop. The dominance of whales over retail traders has diminished by almost 40% over the last quarter.
This trend implies that whales are becoming less active, a common precursor to an impending market downturn. The recent movements in BNB’s price and market indicators suggest a forthcoming correction.
Nevertheless, the strong uptrend indicates that the $560 level could serve as a favorable entry point for traders. Following this, BNB possesses the potential to climb higher, aiming for a target of $800.