BNB, the utility currency of the Binance ecosystem, remains volatile, like the rest of the currencies in the markets. However, on the last trading day, BNB has been moving lower with decreasing volumes and ranges. This formation is likely because of the general uncertainty and apprehension across the crypto sphere.
Since the capitulation two weeks ago, traders have been unwilling to commit, as market data shows, therefore impacting trading volumes, and this, in turn, has squeezed volatility.
A notable observation is that prices are steady, generally lower from the close of October range, and within a bear flag with no clear direction in the near term. Bears remain in control unless there is a definitive break above the immediate resistance.
Crypto Liquidity Crisis
Trackers show that open interest, that is, the number of open leverage positions, is lower. This contraction coincides with the sharp fall of asset prices on November 8 and 9, which saw FTX and Alameda severely impacted.
The closure of open positions in the now-bankrupt FTX contributed negatively to the contraction of trading volumes, thus, liquidity. Currently, most positions are open in Binance, the world’s largest cryptocurrency exchange.
Going forward, how BNB reacts will primarily depend on sentiment. Part of this will be driven by fundamental factors and the way market players interact, injecting momentum into projects in dire need of liquidity.
Binance CEO Changpeng Zhao stated creating an industry fund through which deserving projects will receive much-needed funds.
BNB Price Analysis
From the daily chart, BNBUSDT prices remain in a narrow trade range. The coin is down 33 percent from November highs and trending above critical support at $250, coinciding with Q3 2022 lows.
Notably, this is also around the 50 percent Fibonacci retracement level of the June to August 2022 trade range. Technically, BNB remains within a bear flag and inside the November 9 bear bar, pointing to weakness.
Therefore, unless there is a close above November 9 highs at around $315, every pullback towards this reaction level will present a liquidation opportunity for sellers targeting $250 in the short term.
Deeper losses below Q3 2022 lows might see BNB plunge to $220, the 78.6 percent Fibonacci retracement level of the June to August 2022 trade range.
Technical charts courtesy of Trading View.
Disclaimer: Opinions expressed are not investment advice. Do your research.
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