BNB Looks Like a Buy at $600 As Retail Investors Capitulate

BNB (BNB) has been one of the worst victims of the latest sell-off among the top 5 cryptocurrencies after dropping by 21% in the past 7 days alone.

The native asset of the BNB Chain has accumulated a year-to-date (YTD) loss of 31.5%. This means that market sentiment continues to be extremely pessimistic.

Just a few days ago, the Fear and Greed Index dropped to its lowest level on record at 5. Meanwhile, social sentiment also shows that the general public is increasingly losing interest in the crypto market.

This is often a contrarian signal for crypto assets. It means that retail investors have capitulated, meaning that the cycle’s bottom might be near.

Social Volumes Indicate Bullish Capitulation

Data from Santiment shows that Social Volume has dropped to a key level that has preceded two strong uptrends for BNB in the past 18 months.

This is a metric that tracks the number of times that a specific token is mentioned across more than 1,000 different channels,

BNB Social Volume – Source: Santiment

As retail loses interest in cryptos, the “smart money” could start showing up to accumulate and build up a floor for the next bullish cycle.

Subsequent spikes in social ranks have usually provided confirmation of a potential bottom. This another metric tracked by the crypto analytics firm. Interestingly, on February 8 and 9, BNB occupied the 5th and 8th place within this rank.

This could mean that top media outlets are heavily bearish on BNB. This is typically a contrarian signal for cryptos as well.

Daily RSI Flashes Oversold Adding Up to Contrarian Signals

Heading to the charts, the daily BNB chart shows that the token is hitting a key support area at $600 from which it started its latest rally to a new all-time high.

BNB/USDT Daily Chart – Source: TradingView

This is a full circle move for BNB, unfolding in just 4 months and resulting in a 55% loss for those who bought at the very top.

The Relative Strength Index (RSI) just hit oversold at around 14. This could be considered an early buy signal, as it is the lowest level this momentum reading has reached in around 30 months.

If the price bounces back off this level, we could expect a move to $750 in the near term.

Depressed social sentiment could add further fuel to the fire. The reason: retail traders may be positioning for the continuation of the current downtrend.

This tends to be counterintuitive as market makers now know that there is a lot of liquidity sitting above psychological resistances like $600 and $700. These are the most likely targets where stop orders are set by bears.

Hence, they could aim to trigger a short squeeze by pushing the price above these marks over the next few weeks.

BNB’s Cycle Bottom Could Be Near

In contrast, if we do get a move below $600, the next stop could be $520, meaning a 13.3% downside risk.

BNB/USDT Hourly Chart – Source: TradingView

Lower time frames are heavily bearish right now, as five consecutive sell signals have popped up in the 4-hour chart. Moreover, an eye-popping total of 8 “sells” in the hourly time frame.

We believe that sellers may have already gone too far, contrarian signals are strong, and too much liquidity has built up at higher price zones. Hence, the $500 level seems like a highly likely cycle bottom for BNB.