Binance’s native token BNB was among the few gainers on Tuesday as the rest of the high-cap cryptocurrency assets corrected lower.
Binance Coin trades inside a medium-term ascending parallel channel. Source: BNBUSD on TradingView.com
The BNB/USD exchange rate climbed up to 13.47 percent to $40.69, a level only a few basis points below the pair’s all-time high of $43.15 from June 2019. So it seems, traders flocked into the Binance market to seek safety from XRP, a Ripple-backed token that lost more than 32 percent of its value in the last 24 hours.
It is not clear why traders opted for BNB even when other bullish tokens like Bitcoin and Ethereum were available as hedging alternatives. But from the look of it, the capital inflow into the Binance market picked momentum after the exchange’s CEO Changpeng Zhao announced that they would launch new projects in 2021.
So excited about 2021. A few big products launching next year. Projects kicked off internally already. 😎😉
— CZ Binance (@cz_binance) December 28, 2020
The probability of BNB hitting an all-time high in the dollar-pegged market increased as the token hinted that it is bottoming out against Bitcoin.
Binance Coin tests a classic support area for a potential long-term rebound. Source: BNBBTC on TradingView.com
The BNB/BTC exchange rate reached a classic support area, as shown in the chart above. The pair this week rebounded off the rectangular price floor, repeating the beginning of a fractal that last sent its prices soaring by almost 290 percent.
That is partially due to Bitcoin’s overbought status. The flagship cryptocurrency’s latest rally pushed its prices up from late $10,000 to as high as $24,300 this month. Meanwhile, it also raised the possibility of massive sell-offs at the hands of whales. Such a scenario often leads traders to look for hedging assets inside the crypto space, benefiting coins like BNB.
BNB/BTC weekly RSI is at 32, which places the pair in an ideal accumulation zone. Therefore, traders could increase long exposure on BNB against BTC, with Fibonacci levels in the chart above serving as potential upside targets.
Meanwhile, Mr. Zhao noted that BNB could achieve similar results in the dollar-pegged markets.
“BNB’s ATH in the Dec 2017/Jan 2018 run was $24 (when BTC made $19700),” he said. “BNB had since broken that ATH in July 2019 ($39), before BTC made a comeback. It now looks like it’s going for it again.”
The weekly RSI on BNB/USD charts was above 70, reflecting its overbought status in the medium-term. That amounted to a downside correction.