What should BNB investors do to avoid unfortunate consequences?
BNB, the industry’s fourth-largest cryptocurrency by market cap, recently broke above a falling channel. Therefore, many investors and traders have bought into it.
But is that a smart idea? Let’s take a look at all of BNB’s price action so far.
USDT | Source: TradingView
Technically, BNB broke positively above the bearish channel and this bodes well in the near term. However, it must also be noted that it is still trading below the 50 DMA, 200 DMA and much below the immediate resistance.
At the same time, the RSI shows no signs of recovery. So, BNB still has a long way to go before it can provide positive momentum.
However, the current price level presents a unique opportunity to buy into a well-known and popular coin, backed by a plethora of signals.
For example, the average coin age for BNB is in a steady uptrend. This represents HODLer’s optimism despite the recent corrections and bearish sentiment across the market.
Average coin age | Source: Santiment
Additionally, data from bscscan.com has clearly highlighted a steady uptrend on the BNB chain (formerly Binance Smart Chain) single address chart. In fact, on February 14, the number of unique addresses reached more than 135.6 million.
Number of unique addresses on the BNB chain | Source: bscscan.com
Also, according to Santiment, the social dominance rate has skyrocketed in the past few days. All of these factors suggest that the community is beginning to return to foster care. This usually leads to a recovery period.
In the short-term, a 5% rise in BNB at press time has resulted in the liquidation of over $728,000 worth of short positions on exchanges. From the perspective of surfing traders, this could be a good buying opportunity as the near-term rally is likely to continue as many short positions are liquidated.
Total Liquidation | The source: coin jar
All in all, on-chain metrics are looking broadly positive, but they need some key price confirmation from the chart. This has not happened yet.
Positive confirmation could come in the form of a break above the 200 DMA, providing some much-needed bearish support for the coin.
However, given the inherent use cases and optimism, a phased approach can help keep prices cheap. At the same time, you should not risk too much money, as this can lead to unfortunate consequences.
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