Does BNB work really well when it is highly correlated to Bitcoin?

Apparently, the $ 1 billion development fund announcement was what sparked the BNB’s most recent rally, but after a rally of nearly 15%, the charts began to fall into stagnation.

However, the third largest altcoin by market cap is up more than 20% weekly at press time, while BTC is only 8.2%, so BNB’s overall health isn’t that bad.

However, as price consolidates on the shorter time frame, there are interesting patterns to watch.

Correlation between BNB and BTC

Although the price of the crypto market is clearly correlated with Bitcoin, different coins will have a different correlation. In it, BNB correlates high with the crypto king with 0.85.

The correlation coefficient is a measure of the strength of the relationship between the relative movements of two coins and is measured between +1 and -1. Therefore, a higher value means that the asset has a high dependency on BTC in the price movement.

The source: Sanbase

Notably, there have been significant similarities in the trajectory of BTC and BNB over the past year. Interestingly, the BNB previously reacted very strongly, causing losses, but when BTC fell, it was unable to make up for those losses despite repatriation. Especially after October 13, 2021, the BNB did not follow BTC’s strong uptrend and while there were some gains it was not that impressive.

follow data by Macroaxis, assuming a 90-day trading period, Bitcoin is expected to achieve a 0.9x return on investment compared to BNB. Meanwhile, BTC is also 1.11 times less risky than BNB. Hence, it seems that BNB follows BTC in price, but this altcoin is not doing very well.

Indicators also paint a worrying picture

The BNB’s MVRV ratio at the time of going to press fell back into negative territory as prices consolidated on the lower time frame. In addition, the number of active addresses remained low throughout the year – a cause for concern.

The source: Sanbase

However, since the speed of BNB is relatively higher, it shows that coins are circulating quickly on the network.

There is still hope for BNB

While things look worrying for the BNB price, the Binance Smart Chain continues to grow. In fact, BSC’s number of active addresses continued to hit an ATH of 1.5 million wallets per day over the past week.

In particular, the announcement of the fund triggered the price despite the consolidation movement at the time of going to press. They sent a strong long-term message that Binance is spending “huge” money to continue exploring and pioneering Metaverse, virtual reality, as noted by analyst Scott Melker.

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Minh Anh

According to AMBCrypto

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