Binance Coin, or BNB, has been one of the best performing cryptoassets in the entire crypto market, during the “crypto winter” of 2018.
The vast majority of other altcoins lost 95% or more of their USD value during the course 2018. Compared to this standard, BNB far outperformed pretty much all other altcoins in terms of how much value it actually retained. From top to bottom, BNB lost “only” about 84% of its value versus USD, at the worst point.
What’s more, BNB’s intra-year performance was exceptional (for a large-cap coin), proving to be one of the strongest picks of the bear market for those buying at the right time: From February to June, BNB yielded about 215% worth of gains; and from December 2018 to April 2019, it has yielded as much as 380% of price increase.
All of this green propelled the crypto up several spots in the market cap rankings during the year, making Binance Coin is now one of the most talked about tokens among crypto analysts and chartists.
What of BNB’s price? After having gone almost verticle in the last few nmonths, can the increases continue? This piece will briefly cover the technical outlook for BNB – not the fundamentals, which have been tackled elsewhere here at CryptoTreat.
In order to glean as much as possible out of the BNB charts, we will use both the USD(T) and Bitcoin (BTC) trading pairings.
Looking at the BNB/USDT chart below, we should notice the crypto’s two-plus month respect of an uptrending channel. However, during the last cycle, BNB failed to reach the top of this channel (purple arrow) as it had before (green arrow). This could suggest an eventual rolling-over.
There is further, clear evidence suggesting a season of downside for BNB. The weekly Relative Strength Index (RSI), perhaps the most important technical analysis indicator (both for crypto and legacy investments), is deeply overbought (purple arrow).
Another important indicator, the MACD+Histogram, bottom, tells the same story. The contracting moving indicators (orange arrow) suggest downside action; as do the falling histogram bars. Weekly indicators are very hard to move one way or the other, and so are not susceptible to rapid reversals like smaller timeframe indicators. All of this evidence points to a correction on the USD value.
Looking at the BNB/BTC trading pair, we can see that BNB has been even more successful for trading against Bitcoin. Here, BNB’s retraces have been far more shallow than versus the USDT trading pair. But even here, again a weekly chart, the technical indicators are clamoring for some correction and cooling.
We are probably safer taking the BNB/BTC trading pair as a better overall illustration of not only the digital asset, but of the Binance enterprise itself – namely, an illustration of steady and strong growth. Even if in the medium term BNB needs a correction, the long term trend line (dotted red), has never yet been broken.
But how much could BNB correct?
One helpful tool at our disposal is a Fibonacci retracement overlay, another widely used technical analysis tool. Without wading too far into the weeds explaning this tool, traders use certain set percentages to estimate how much price will deflect from its reversal points – and when tradable levels will be reached along the way.
We can see below (versus BTC), that BNB during its broad trend cycles, has either maintained a healthy respect of the 0.618 retracement level, or completely blown through it to roughly the 0.8 level.
From March to November 2018, when Binance was really establishing itself as a major player in the industry, BNB held the 0.618 level. It broke this level only when the entire market collapsed, as Bitcoin broke through its critical $6,000 mark.
We can see that, during the current trend cycle, the 0.618 retrace level – which, we have observed, has held BNB/BTC before – neatly correlates with BNB/BTC’s historical uptrend line – which has never yet been broken in the life of the BNB crypto.
Excepting some negative black swan event associated with BNB (like a Binance hack), or another collapse of the total cryptoasset market (which would have to mean that the current dramatic gains are a giant fake-out, leading to another phase of the 2018 bear market and a retest of 2018’s lows), we can reasonably expect BNB/BTC not to break this trend line, nor the 0.618 Fibonacci point.
This point, around 0.0025 Bitcoin per BNB, seems like a good place to wait for a BNB retrace, should it actually fall this far.