BNB Burn Fails to Propel Price Beyond $700 — Possible Reasons Why
Key Takeaways
- The BNB burn mechanism has successfully burned 1.63 million tokens since its introduction.
- While BNB price trades in an ascending channel, the major resistance at $695.30 has yet to be tested.
- Indicators like the RSI and MACD reveal that the cryptocurrency’s value might continue to drop.
Earlier today, BNB Chain, the blockchain created by the Binance crypto exchange, announced that it had completed the 30th quarterly burn of its native token.
Despite the token burn, which reduced the BNB’s circulating supply, the cryptocurrency has failed to break past $700. The inability to retest this key threshold raises questions about the broader impact of the event on BNB’s price.
Could BNB be facing a prolonged period of consolidation, or is a significant rebound close? Let’s find out.
BNB Momentum Stays Bearish Despite Rising Channel
BNB Chain introduced the burn mechanism after its Mainnet launch in April 2019. At that time, the chain disclosed that the process aims to remove 100 million BNB, representing half of its total supply from circulation.
According to the chain, the 30th quarterly burn has eradicated approximately 1.63 million BNB tokens from circulation. This is equivalent to $1.16 billion.
While token burns typically create scarcity and should drive prices higher, BNB’s price remain muted. As of this writing, the value stands at $683.77.
According to the daily chart, BNB trades within an ascending channel. This channel has helped the cryptocurrency hit higher highs and lower lows, including an all-time high of $793.35 on Dec. 4.
However, it has yet to reclaim the $700 mark after failing to test the resistance at $695.30. Besides that, BNB looks more inclined to drop to $648.30 support as the Relative Strength Index (RSI) has dropped below the neutral line.
The drop below this line, as shown above, indicates bearish momentum around the cryptocurrency. If sustained, the BNB burn might fail to effect a significant upswing for the coin.
BNB Price Prediction: Trend Continues to Get Weak
Looking at the Moving Average Convergence Divergence (MACD) in the same timeframe, CCN observes that the reading has dropped to the negative region.
The MACD measures momentum using the difference between the 12 and 26-period Exponential Moving Averages (EMAs). When it is positive, momentum is bullish.
However, since the MACD reading is negative at the time of writing, it means momentum is bearish. As such, BNB’s price is more likely to experience a downtrend over a rebound as long as the market conditions remain the same.
If that is the case, BNB could decline to $629.60 at the 0.382 Fibonacci retracement level, representing the support floor. However, the inability to hold this support could lead to an extended correction.
In that scenario, the BNB price could drop below $600. On the other hand, the impact of the BNB burn might eventually be reflected if buying pressure increases.
Should that be the case, the crypto’s market value could surge to 737.30.
In a highly bullish market condition, BNB price might rally to $800 and mark a new all-time high.
