BNB Chain DEX Volume Shrinks Over $4B While Price Faces Key Resistance
Key Takeaways
- Despite reigning over other chains earlier, BNB Chain’s volume has dropped below $3 billion.
- The decline has affected demand for the cryptocurrency, with traders choosing bearish positions.
- BNB seems to have formed a falling wedge, with indicators predicting a possible drop below $600.
The BNB Chain ecosystem has been a subject of heightened interest in the market lately. Due to this, BNB’s price has become one of the best-performing cryptos of the last seven days and is in the top 10.
The price increased by 10% during this period, and the market cap flipped to Solana (SOL). Amid this price increase, BNB Chain’s decentralized exchange (DEX) volume jumped to its highest level since January on Feb. 13.
But as of this writing, that is no longer the situation. With the recent decline, BNB’s price faces mounting resistance, raising concerns about a potential breakdown.
Chain Volume and Fees Fall Behind Solana
Last week, CCN reported an uptick in activity on the BNB Chain. During this period, the blockchain’s revenue increased as former Binance CEO Changpeng “CZ” Zhao called for more building and indirectly encouraged the launch of memecoins.
In the build-up to this, data from Artemis showed that the BNB Chain DEX volume climbed to $7 billion, rising higher than Solana’s. The hike in the volume indicates an increase in the liquidity flowing into the ecosystem and rising demand for the cryptocurrency.
However, as of this writing, the BNB Chain DEX volume has decreased to $2.8 billion. This decline coincided with BNB’s price drop from $700, signifying that buying pressure around the cryptocurrency has decreased.
Furthermore, data from the crypto intelligence firm Nansen shows that BNB Chain’s fees have now fallen behind Solana. Just last week, during the market surge, it was the other way around.
Should this trend continue, BNB’s price might find it challenging to return above $700 in the short term.
BNB Traders Choose to Stay Bearish
In addition, the cryptocurrency’s funding rate has turned negative. The funding rate represents the cost of holding an open position in the derivatives. market.
When funding is positive, the perp price trades above the spot price. This means traders with long positions pay funding, and short positions receive it. On the other hand, when funding is negative, short positions to pay funding are too long to keep their contracts open.
With BNB’s funding rate remaining negative while its price was rising, the inference is potentially bearish. If this remains the case, the price might experience a decline.
BNB Price Prediction: Reversal Imminent
From a technical perspective, BNB’s price has been trading in an ascending channel since Feb. 5. In this pattern, the cryptocurrency hit higher and lower highs on the daily chart.
However, the price rise seems to have led to the formation of a rising wedge. A rising wedge is a technical pattern that signals that a cryptocurrency’s price has reached a local top and could reverse its recent gains.
Following this formation, the Relative Strength Index (RSI) reading has dropped from its peak on Feb.12. This decline indicates waning momentum around BNB.
If sustained, the cryptocurrency’s price could fall to the 0.382 Fibonacci retracement level of $ $617.60. In a highly bearish situation, the price risks falling to $575.80.
Alternatively, if BNB Chain sees another increase in DEX volume, this could lead to increased demand. In that case, BNB’s price could rally to $733.10.
