Tether Dominance Drops as Bitcoin and Binance Coin Surge: Can BNB Bulls Defend Psychological Support Zone?
Recent days have seen Tether’s (USDT) dominance in the crypto market decrease from 8.24% on March 11th to 6.6% on March 17th. As a result, Bitcoin (BTC) and altcoins like Binance Coin (BNB) have experienced significant gains, with investors moving funds from stablecoins back into cryptocurrencies.
However, the current market sentiment has turned less bullish, with Bitcoin struggling near the $29.2k resistance level. Speculators and investors may be sidelined in anticipation of potential high volatility after compression on lower timeframes. This raises the question of whether Binance Coin can maintain its psychological support level if the market turns tumultuous.
Assessing Binance Coin’s Technicals
On the four-hour chart, Binance Coin is currently in a downtrend after its rally to $330 in March. While this pullback follows a large rally from $260 earlier in March, the overall structure appears bearish on the four-hour timeframe. The RSI also shows bearish momentum, with a slight edge.
Despite this, the uptrend on the On-Balance Volume (OBV) indicator indicates healthy demand behind BNB. Additionally, the $300 mark serves as a round-number psychological support level for the bulls. It previously acted as resistance in January but was flipped to support in February, and is currently serving as a support level again at the time of writing.
Higher timeframe charts reveal that the $300 and $320 levels have been significant in the past, including in August, September, and October 2022, as well as further back in history. Aggressive buyers may view a move into the $300-$305 range as an opportunity to bid on BNB. However, a slide below the $300 level could result in further downward movement towards $291 and $276.
Examining Bearish Sentiment and Funding Rate
The funding rate is currently negative, indicating that long positions are paying funding fees to short positions. This suggests that bears are currently in the majority. Moreover, the one-hour chart has shown an increase in Open Interest on April 5th and 6th, during periods of BNB price decline.
This highlights strong bearish sentiment surrounding the Binance Coin, with speculators likely entering short positions as prices fell. Therefore, a significant drop in BTC prices and a shift in market sentiment could potentially push BNB below the $300 support level rapidly.
Overall, Binance Coin faces a critical juncture as it hovers near its psychological support zone. Traders and investors will closely monitor market dynamics and technical indicators to gauge whether BNB bulls can defend this key level amidst potential market volatility.
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