With Binance Coin’s bearish structure, this is where short sellers can re-enter

Disclaimer: The information presented does not constitute financial, investment, trading or other types of advice and is solely the opinion of the author

  • The market structure on daily and lower time frames was bearish
  • A bounce from $220 was underway, but met resistance at $240

There has been a lot of fear around Binance in recent weeks, following FTX’s implosion. This fear was clearly visible on the price charts of the exchange token Binance Coin [BNB].

Moreover, CryptoQuant’s recent report on Binance’s Proof-of-Reserve highlighted that their liabilities were 97% secured by the currency reserves.

Read Binance Coins [BNB] Price prediction 2023-2024

This data suggested that Binance was not exhibiting FTX-like behavior. Their report was more to establish that Binance actually had the amount of BTC they claimed they had, and not to stir up positive feelings about the exchange.

Binance Coin crashes below $250 mark, bulls fight to regain $240

Source: BNB/USDT on TradingView

The price charts were hugely skewed in favor of the bears this past week. In late November, BNB rose to test the $315 resistance level and met rejection. Until December 11, the price began a gradual downtrend, which appeared to be more of a pullback before another push.

However, this idea was quickly invalidated when Binance Coin dipped below the $276 support level. It retested the same as resistance on December 14. The area above marked in red represented a bullish order block on the 12-hour chart.

During the drop, the area gave one positive reaction, forcing a bounce to $276. However, the downtrend was too strong and this bullish order block was turned into a bearish breaker.

A retest of this switch could offer shorting opportunities, targeting the $216 level that served as support back in July. Invalidating this bearish notion would be a pullback above the $260 mark and the highlighted breaker.

Average coin age rises, but funding rate falls to show bearish sentiment

Binance Coin is suffering due to FUD and more losses may follow

Source: Sentiment

The sharply falling funding rate led to short selling becoming an overcrowded trade. While this showed strong bearish momentum from futures traders, it also meant that a move to the upside could force these shorts to close at a long and fuel further rallies.

Such a move into the $250 area, if realized, could be used by the bears. However, the average coin age of 90 days has been on a steady rise since late November.

This suggested that BNB tokens did not see increased activity on the chain, which usually occurred along with intense selling. On the social front, weighted sentiment was negative in the last week. Social dominance also shot as far north as 10.8% earlier this month, but has fallen since then.

Binance Coin is suffering due to FUD and more losses may follow

Source: Coinalyze

The open rate calculation rose strongly since 12 December. This was the day when BNB fell from the $290 mark, showing that short positions were likely to be opened. Thus, the selling pressure seen in the futures market was accentuated.

The increase in OI, together with falling prices, once again underlined the strong bearish sentiment behind BNB.

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