What is BNB ?
The Binance Coin (BNB) was developed by the company Binance , which is also a cryptocurrency exchange site. The BNB, which is an Ethereum ERC20 token, saves on the trading costs charged by the platform. In terms of figures, the BNB is THE crypto currency that has lost the least value since the beginning of the bear market. Between the end of December 2018 and today, the BNB has increased by more than 280%. The Binance Coin is currently ranked 7th in terms of MarketCap.
How can this be explained?
First, it is linked to the phenomenal success of Binance (platform launched on 14 July 2017), which very quickly established itself as the leader in the cryptocurrencies trading platform. In particular thanks to the vast portfolio of altcoins it offers. The other reason is the development of Binance’s fully decentralized exchange: DEX where the BNB has a central role since it is the universal exchange currency on this platform. Indeed, it is impossible to transit anything other than the BNB when you want to exchange with the outside world.
It is also important to note that every quarters, Binance uses a portion of its profits to buy BNB at market prices. The platform then burns its tokens. This will continue until half of the BNB are destroyed. Consequently, the total quantity of BNB is regularly reduced, which leads to an increase in its value. It is the law of supply and demand.
As can be seen on this graph with the yellow dotted line, the BNB has experienced an almost parabolic increase since the beginning of December 2018. After hitting its resistance (an old and very solid support which is around 11/12$) for 4 days, it finally broke it up on March 5, 2019. It should be noted that this resistance perfectly matches with the 38.20% level of Fibonacci retracement. Moreover, we also notice that the BNB very precisely respects the different supports of Fibonacci, whether those of 23.60/38.20/50/61.80%… At the moment the BNB seems to form a double top on the $20 area.
What future for the BNB ?
Two possibilities: either an increase to 23/25$ with a possibility of resistance at the level of 78.60% then a decline on Fibonacci supports of 61.80% / 50% and in the last case 38.20%.
Or a double top confirmed around $20 and a re-test of the supports seen previously. It can be seen on the graph below that the RSI indicator has been fluctuating for more than 80 days in the overbought areas for the BNB. The same is true for the Wave Trend indicator. This represents a long bullish period and a return to lower supports would therefore not be surprising. Unless Changpeng Zhao, the CEO of Binance, makes a particularly bullish fundamental announcement on his Twitter account! Something that has already happened several times over time.
Which strategy to adopt?
If you think that the BNB will fall back on its key supports, you won’ be able to short it. However you can always increase your quantity of BNB by applying the “average down” method. This method of repurchasing a value at a lower price reduces the average price you paid for your BNB. So if you think that the NBB will decline in the coming days/weeks, you can sell some of your BNB at the current price and then buy them back in the following areas: $17.40 / $14.80 / $12.40. However, the probability of revising the $12.40 remains rather low.
Warning, these are estimates and it is obviously necessary to monitor BNB and its evolution.
This is a trading plan and not a prediction. Invest only what you can afford to lose.