- If financing rates remain negative, BNB could recover in the medium term.
- A break above the resistance at USD 309.5 could push the price towards USD 320.
AMBCrypto’s analysis of Binance Coin’s [BNB] The funding rate showed that the currency could be ready for a bounce if history is any guide. Like other cryptocurrencies, BNB suffered a setback when its price fell from $334 to $291. This dump represents a decline of 6.14% over the past seven days.
Compared to other altcoins, Binance Coin seemed to have shown better strength. This came as many other top altcoins fell by double digits over the same period.
With regard to the financing percentage, data about the chain assessed van Santiment revealed it was deep in negative territory. At the time of writing, the benchmark was -0.037%.
Source: Santiment
If the financing rate is positive, it means that the perp price is trading at a premium compared to the cash value. If it is negative, it means that the perp price is trading at a discount compared to the index price.
A possible recovery requires caution
In terms of price action, a high negative funding rate is a potentially bullish sign. This is because shorts are aggressive and get no reward for it. The price could therefore provide support.
This assertion was clearly visible in BNB’s historical performance. For example, on December 18, the financing interest rate was at a similar level.
At that time, the price of BNB was $243. But by December 26, the coin value had risen to $305.
A similar scenario also played out in August 2023, as shown above. However, it is uncertain whether the rebound will occur within a short period of time or whether it could take longer.
This led AMBCrypto to check the Liquidation HeatMap.
Liquidation HeatMap predicts price levels at which traders’ positions could be closed due to price fluctuations and insufficient margin balance to cover open positions.
At the time of writing, HyblockCapital data showed that large-scale liquidations could occur between $320 and $325. So long position traders looking to profit from these targets may need to be wary.
Source: Hyblock Capital
Should a highly leveraged, lower margin position hit any of these areas, it could lead to a strong close. On the other hand, traders with positions looking for lower prices, but not below $290, could benefit from the potential price increase.
Lows, and then another high
On the 4-hour chart, bears seemed to control the story. However, bulls made attempts to retest the support at $299.4. If the breakout occurs, it could help reverse resistance at $309.5.
Moreover, the Relative Strength Index (RSI) could support the upward move. This was because the reading at the time of writing was 31.47, indicating that Binance Coin was oversold.
If the bulls win out over the bears, the oversold state could trigger a rebound and potentially lead BNB towards $320.
Source: TradingView
Read Binance Coin’s [BNB] Price forecast 2024-2025
But the 9 EMA (blue) and 20 EMA (yellow) were above the price of BNB. This indicates a possible decline.
However, the recovery of BNB remains an option. The only problem is that this may not happen in the coming days. But it seems likely that this will happen in the medium term.