Prior to Litecoin (LTC) kicking off a 200% rally that would spread to Ether (ETH) and Bitcoin (BTC), Binance Coin (BNB) was the shepherd that signaled the altcoin herds to rally forth in what is now affectionately referred to as “altseason.”
BNB far outpaced Bitcoin, Litecoin, and Ethereum as it rallied nearly 600% compared to Bitcoin’s 300% rise from $3,100 to $13,800.
The move seemed to be propelled by back-to-back Binance-supported initial exchange offerings, rising altcoin prices and an improvement in general sentiment amongst investors who finally felt the 15-month long bear market had ended.
Daily Crypto Market Performance. Source. Coin360.com
Since notching an all-time high near $40 on June 22, BNB hit a snag and has been in a downtrend since. It seems the real trouble started when Binance announced that United States-based users would be banned from its main platform and forced to the regional Binance America version.
The BNB token perked up a bit once the exchange announced that a U.S. version of Binance would soon launch. But sentiment again soured as the media reported that the number of digital assets and pairings offered paled in comparison to the original platform.
BNB is no longer immune to Bitcoin’s price action and it — along with the vast majority of altcoins — have suffered mightely since Bitcoin topped out at $13,800 and entered a prolonged period of consolidation.
Is BNB a good long?
Despite the disconcerting news and disappointing price action, BNB still has a lot going for it. Binance.US launched on Sept. 24. As previously reported, the platform will list BTC, ETH, XRP, BCH, LTC, BNB and USDT across 13 fiat-to-crypto and crypto-to-crypto trading pairs.
On Tuesday, Binance.US also revealed that Cardano (ADA), Basic Attention Token (BAT), Ethereum Classic (ETC), Stellar Lumens (XLM) and Ox (ZRX) would be listed and deposits for the altcoins is open now.
Another future positive for BNB is the fact that the native token is used to pay the fees for Binance’s Futures Trading platform. Two weeks ago, Binance announced that it would include all current and future BNB-based products and services in upcoming coin burns.
Future coin burns, BNB’s utility for paying trading fees and processing margin trades on the futures platform should make BNB more “useful.”
Furthermore, there’s always the possibility that Binance.US will eventually use BNB for trading fees, staking and lending. Given Binance’s ambitious plans for expanding its reach by establishing decentralized exchanges across the globe, it’s not too far fetched to imagine that BNB could make its way onto decentralized finance — also known as “DeFi” — platforms like Celcius, Compound Finance, BlockFi and dYdX.
With that said, BNB is not looking great in the short-term and currently continues to lose value within a descending channel. Let’s take a look at the charts to see what’s going on.
BNB/USDT Daily Chart. Source: TradingView
BNB fell to $13.80, a new 6-month low not seen since March 21. Today’s abrupt 11% Bitcoin correction was strongly felt by BNB and the altcoin dropped below the descending channel.
A strong oversold bounce on the Relative Strength Index (RSI) resulted in a 12.95% bounce from $14.47 to $16.38. But unless the market improves, the next stop for BNB could be at $13.60. A drop below $13.60 could see the altcoin drop to $9.40
BNB/USDT Weekly Chart. Source: TradingView
As shown by the volume profile visible range (VPVR) on the weekly chart, a drop below $14 extinguishes purchasing demand until $9 to $11. Though the RSI approaches oversold territory, there is still room to fall and in December 2018 the weekly RSI dropped to 31 before reversing course.
If Bitcoin price enters a lengthy period of consolidation in the $8,000 to $9,000 range, it’s possible that BNB could drop further. The weekly Stoch has also bottomed out resting on 0.
Ultimately, like other altcoins, BNB’s performance appears dependent upon Bitcoin’s recovery and with Bitcoin market dominance still at around 70%, altcoin traders might not have much to look forward to other than a strong oversold bounce within the altcoin market.
Admittedly, Ether (ETH) seems to be a more lucrative trade at the moment. In the event that BNB does drop below $10, traders might consider opening a long position and scaling in on any dips that might follow.