Futures Open Interest Decline Impacts Binance Coin BNB Price Perspective
Binance Coin (BNB) has experienced a significant downturn this week as both the crypto and stock markets have been hit by negative sentiment. The price of the BNB token dropped to a low of $600 on Tuesday, down from its previous peak of $724.
The decline in the Binance Coin token is a result of investors adopting a risk-off sentiment following the release of strong nonfarm payrolls (NFP) data last week. This coincided with Bitcoin hovering around the $65,000 mark and Ethereum falling below $3,500. In the past 24 hours, the total market capitalization of all cryptocurrencies has dropped by over 3%, and the crypto fear and greed index has fallen to 60.
This decrease can be attributed, in part, to anticipation of the Federal Reserve’s decision on Wednesday. Analysts expect the central bank to keep interest rates unchanged, ranging between 5.25% and 5.50%. The Federal Reserve is also likely to indicate that it will continue to rely on data when making decisions regarding interest rate cuts. Jerome Powell, in previous statements, has emphasized the need for more evidence that inflation is moving towards the bank’s target of 2.0%.
The recent crash of Binance Coin marks a significant reversal from last week when the token reached an all-time high of $725. At its peak, the token had a market capitalization of over $106 billion, surpassing the valuations of well-known companies such as Deere, KKR, Palo Alto Networks, and ADP.
The plunge in the BNB token’s price has coincided with a decline in futures open interest, which has fallen from last week’s high of $1 billion to $706 million.
Analyzing the daily chart, it is evident that the BNB token price has dropped from $724 to the psychologically important level of $600. It has reached the 23.6% Fibonacci Retracement point and breached the key support level at $645, which was its highest point on March 16th.
Despite the decline, Binance Coin has remained above the 50-day and 100-day Exponential Moving Averages (EMA), although the two lines of the Moving Average Convergence Divergence (MACD) have formed a bearish crossover. The histogram has also fallen below the neutral level.
Therefore, it is likely that the token will experience a period of consolidation before resuming its bullish trend. If this occurs, there is a high probability that it will retest the all-time high of $725 either by the end of this week or in the following week.
