Crypto Market Round-Up

Typically, cryptocurrencies are termed as digital currencies and use blockchain technology to record every transaction. Binance Coin (BNB) is one of the popular digital assets created by one of the major crypto exchange platforms - Binance in 2017. BNB has a market capitalization of ~USD 44.48 billion (as per TradingView as of September 15, 2022).

Last week, the benchmark S&P Cryptocurrency Broad Digital Market (BDM) Index started on a positive note and maintained momentum for the entire week. The index advanced by 137.34 points (~7.77%) to 1904.184 for the week ending September 09, 2022. In the current week starting September 12, 2022, the index is trading with negative momentum. Also, other major cryptocurrencies such as Bitcoin and Ethereum are witnessing bearish momentum for the current week.

Having understood the S&P Cryptocurrency BDM Index movement over the last week and the scenario for the upcoming week, one crypto that seems ‘Bearish’ at the current level appears to be Binance Coin (BNB) Perpetual Futures based on the below technical parameters: -

Binance Coin (BNB) Perpetual Futures:

Noted below are the generic insights, indicative entry price, support levels, and resistance for the next 1-2 weeks duration for the BNB:

Entry level and Support Levels as mentioned herein are only indicative in nature as per trend analysis and further evaluation is required when looking at cryptocurrency under discussion.

Note: The reference Information in this report has been sourced from TradingView.

BNB Technical Analysis Summary (On the Daily Chart):

On the daily chart, BNB’s price witnessed a breakout of the rising trendline support at the USD 281.60 level on August 31, 2022. Since then, prices have been sustained below the rising trendline resistance level, indicating negative movement in price action. Moreover, the prices are trading below the trend-following indicators 21-period & 50-period SMA, indicating downside momentum in the cryptocurrency. Further, the leading indicator RSI (14-period) is showing a reading of ~44.58 level, indicating negative momentum.

The momentum indicator MACD line is trading below the centerline, supporting a negative stance. However, the prices are trading above the Parabolic SAR indicator, which may act as a support level. Now the next support level appears to be at USD 235, and prices may test this level in the coming sessions (1-2 weeks).

Noted below are the illustrative points as key positives and risks when looking at Binance Coin (BNB) in the cryptocurrency space: -

Illustrative points as Positives:

• Best Utility token: BNB is considered as of the best utility tokens in 2022 and can be used to pay fees and to trade on the Binance exchange.
• Unique Burnout Policy: BNB tokens have a burning policy which is an essential feature to ensure their stability and growth.

Illustrative points as Risks:

• Heavily Centralized: BNB is centralized through the strong hold by Binance. According to the data from Etherscan, Binance owned up to 80% of the BNB tokens in several wallets. This becomes a genuine concern as the majority control over the coin increase the possibility of manipulation of the blockchain.
• Regulatory Hurdles: Binance has faced many regulatory hurdles in the US, Germany, Japan, Malta, and Ontario, Canada. Regulators also banned Binance in the UK in 2021 which becomes vulnerable for investors.

Conclusion:

Based on the above-mentioned price action analysis and technical indicators outlook, Binance Coin (BNB) perpetual futures may witness movement in the downside direction. The trend looks to be in an interesting space and the currency looks ‘Bearish’ given the current price of USD 277.727 (as on September 15, 2022, at 08:40 AM, (GMT+1) Time in London, UK. However, volatility in the price should be borne in mind when looking at further evaluation for investment scenarios. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while making investment decisions.

Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.80:1.00), however, returns are generated within 1-2 weeks’ time frame. This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the cryptocurrency has not been considered in the decision-making process. Other factors which could impact the cryptocurrency prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Trend Indications 

Bullish Trend is generally used in information services and financial reporting as a trend typified with an upward momentum in prices based on the market sentiments, overall price action, and technical analysis. Typically, Resistance Levels or Indicative Stop loss levels need to be evaluated for exit triggers. 

Bearish Trend is generally used in information services and financial reporting as a trend typified with a downward movement in prices based on the market sentiments, overall price action, and technical analysis. Typically, Support Levels or Indicative Stop loss levels need to be evaluated for exit triggers.

When we identify trends as ‘Bullish’ or ‘Bearish’ it is based on a technical analysis of the available data as we understand it and is not, and should not be considered as, either advice or a recommendation to buy, sell or hold the relevant cryptoassets.

Note 2: How to Read the Chart?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50-period SMA. SMA helps to identify existing price trends and if the prices trade above the 21-period and 50-period SMA, then in general it shows an uptrend trend.

The Black colour line in the chart’s lower segment is a 14-period Relative Strength Index (RSI) which indicates momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the Cryptocurrency. The volume is the quantity that changed hands during the given period. Cryptocurrencies with high volumes are more liquid compared to lesser once and higher volumes help in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. It is suggested to Trail the Stop-Loss as per the aforementioned levels if the Cryptocurrency price achieves more than 60% of the Resistance 1. individuals, in general, might consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 60% of Resistance 1. However, these indications need further evaluation basis associated risks and any change in trends.

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 15, 2022 at 08:40 AM, (GMT+1) Time in London, UK.  S&P Cryptocurrency BDM Index in this report has been sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: This publication is for informational purposes only based on technical analysis and does not reflect the fundamental validity of the cryptoasset. It in no way constitutes investment advice or a recommendation to buy, sell or hold financial instruments. Trading decisions require a thorough analysis by investors taking account of a range of factors, including in relation to cryptoassets in themselves, general market trends and an investor’s own ability and appetite to take risks and bear losses.

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