Before Litecoin kicked off a 200% rally that later spread to Bitcoin and Ether, Binance Coin (BNB) was the altcoin leader. The token used to shepherd the altcoin groups to rally forth trying to initiate the start of the altseason.
Records showed that BNB far outpaced Litecoin, Bitcoin, and Ethereum as it surged to a 600% gain compared to bitcoin’s 300% performance from $3,100 to $13,800. That move appeared to have been primarily propelled by back-to-back Binance-supported initial exchange offerings. Also, an improvement in the general sentiment amongst most of the investors who eventually felt that the severe 15-month long bear market had ended boosted the token.
The rising altcoin prices boosted the surge in the BNB prices too but it seems like all that is in the distant past. Since flirting with an all-time high around $40 on June 22, BNB stalled and ever since has taken a downward trend. It appears like trouble begun when Binance published that the US-based users would be banned from its main platform.
Binance decided to force their American customers to use the regional Binance America version. The BNB token spiked a bit when the announcement came that the exchange’s US version would soon launch. However, sentiment again became sour as the media stated that the number of digital assets and pairings offered on the new platform were quite inferior compared to the original platform.
Data and studies show that BNB is no longer immune to Bitcoin’s price action. Also, it has joined other altcoins in the severe suffering since BTC peaked at $13,800 and entered into a prolonged consolidation period.
Is it wise to go long on BNB?
In spite of the mixed news and disappointing price action, BNB still has a lot of things going for it. On September 24, Binance US launched with the platform said to list XRP, BTC, LTC, ETH, BCH, USDT, and BNB. It is supporting these assets across 13 fiat-to-crypto and crypto-to-crypto trading pairs.
On September 24, the Binance US platform also revealed that Basic Attention Token (BAT), Cardano (ADA), Ox (ZRX), Stellar Lumens (XLM), and Ethereum Classic (ETC) would be listed. Deposits for these altcoins are now open.
Another notable future positive for the BNB token is the fact that the native token is already getting used to paying the Binance’s Futures Trading platform fees. Around two weeks ago, Binance said that it would feature all the current and future BNB-based services and products in the forthcoming coin burns.
The future coin burns are BNB’s utility for paying its trading fees and also processing margin trades on the futures platform. These are expected to make BNB more ‘useful.’ Additionally, there is always a possibility that the Binance US platform will eventually make use of the BNB token for trading fees, lending, and staking.
Binance has ambitious plans for expanding its reach through the establishment of decentralized exchanges worldwide. Thus, it is not quite farfetched to think that BNB may make its way onto the decentralized finance, DeFi, platforms based on such plans. The DeFi platforms include Compound Finance, Celcius, dYdX, and BlockFi.
With that in mind, BNB is currently not looking great in the near-term and it is still losing value within a descending channel.
The BNB price dropped to $13.80 which is a new 6-month low not seen since March 21. The current abrupt Bitcoin correction of 11% strongly splashed into the BNB market and the altcoin suddenly dropped below the descending channel.
The Relative Strength Index (RSI) had a strong oversold bounce that culminated in a 12.95% bounce from $14.47 to $16.38. For now, the price is hovering around $15.65. However, unless the crypto market improves soon, the next stop for the BNB drop could be at $13.60. Any drop past the $13.60 psychological level could open doors for the token to retest the $9.40 support.
According to the weekly volume profile visible range (VPVR) chart, any drop below the $14 level pulverizes the purchasing demand until around the $9 to $11 zone. Even though the RSI seems to be approaching the oversold territory, more room for falling is still available. In December 2018, the weekly RSI dived to 31 before it reversed its course.
In the scenario that the Bitcoin price enters a long consolidation period in the $8,000 to $9,000 range, it is relatively possible that BNB could plunge further. The weekly Stoch has also bottomed out resting on 0.
In the end, just like all the other altcoins, the performance of BNB seems dependent on Bitcoin’s recovery. Furthermore, with the Bitcoin market dominance still at around 70%, there is no much hope for the altcoin traders. They will only have to look forward to a strong oversold bounce within the altcoin market.
Reports show that Ether, ETH, appears as a more lucrative trade currently. If BNB plunges below $10, traders and investors may decide to open a long position and scale in on any dips that might follow.