Why is BNB’s Price Holding Well Even in a Bear Market?

Key Insights:

• BNB’s trajectory looks promising as the coin has registered six green candles on a daily chart.
• BNB’s correlation to bitcoin still remains high. 
• With retail traders missing in action BNB price can head in either direction. 

Bitcoin (BTC), ether (ETH), and binance coin (BNB) have maintained their market monopoly as the top three non-stablecoin cryptos by market cap despite the bearish market conditions. While bitcoin and ethereum have seen several ups and downs over the last few weeks, BNB’s trajectory looks more promising.

BNB’s Correlation to BTC

One of the reasons behind BNB’s relatively stable price action is that Binance has been stepping its foot into major European nations. Following regulatory approval in France in early May, as reported by FXEmpire, Binance now has its eyes set on Germany as part of its EU expansion goals.

The largest crypto exchange by trading volume has been on a rapid global expansion spree, even in the Middle East, securing regulatory approvals from Bahrain, Dubai, and Abu Dhabi. The same has acted in favor of BNB’s social narrative, keeping prices afloat even in a bear market.

That said, data from Macroaxis highlighted that the three-month correlation between BTC and BNB is 0.95. Notably, the high BTC correlation hasn’t acted as a spoilsport for BNB’s price trajectory.

It is also interesting to note that due to the high correlation between BTC and BNB’s price, BNB’s price is recording decent pumps when bitcoin sees a push from bulls; however, price downsides for BNB have been limited.

Price Bottom Established?

After making a sharp recovery from the critical support at $220, BNB’s price has managed to test the overhead resistance at the 20-day EMA of $325. The resistance zone at the $320 mark is a level that bears would defend cautiously as a break above it could indicate that a short-term bottom has been established.

If bulls can push BNB’s price above the $325 level, then the altcoins could rally to the next crucial support/resistance mark at $350. Once that level is breached, further upward momentum towards the 50-day SMA of $375 could be expected.

However, if the bullish setup fails and bears take control of the BNB price, a downturn towards the $266 mark and the $210 mark could be seen after that. BNB’s high correlation to bitcoin could hinder the altcoin’s trajectory in the near term.

Notably, however, BNB has printed green candles for the most part of last week. Additionally, the coin’s price has made higher highs on a one-day chart since May 20 despite the larger market’s rangebound momentum.

Furthermore, the relative strength index (RSI) BNB presented a rise in buying pressure which supported price recovery after the May 12 price fall. Despite BNB’s price holding key support levels, there was something that BNB’s trajectory still lacked.

Retail Traders MIA

Looking at BNB’s price action, it was clear that BNB still lacked buying pressure from the retail side despite the sustained gains. Trade volumes on BNB’s daily price chart highlighted that average trade volumes were still relatively low compared to Q2 2021.

That said, futures data from Coinalyze highlighted no significant change in aggregate liquidations for BNB. The same meant that even in the futures market, traders were being cautious of their moves due to the larger market’s bearishness.

Additionally, BNB’s open interest for futures and perpetuals contracts stood at $333.7 million noting a 4.65% rise over the last 24-hours. Open interest essentially measures the activity in a particular market.

Relatively higher open interest means there are many contracts still open, which means market participants will be watching that market closely.

In the short term, if the bulls attempt to push the price above the overhead resistance at $320, BNB could rally toward $350. However, with bears defending the $320 level cautiously, a move in either direction could be expected from BNB.

That said, as highlighted in a previous FXEmpire article, a hold above the 100-day EMA would support another run at $340 and the 200-day EMA, currently at $342.