- Binance Coin is facing mounting pressure as price drops below $850, with potential to hit the $700 support level.
- A bearish pennant pattern and key technical indicators suggest further downside in the coming weeks for BNB.
- Falling transaction volumes and futures open interest highlight weakening demand for BNB and Binance Smart Chain activity.
Binance Coin (BNB) has been under significant pressure, seeing a sharp drop of over 1% on December 29. The token, trading at $850, is now far below its year-to-date high of $1,375. The price action has raised concerns about a potential further decline, with analysts predicting a possible dive to the $700 level, as key metrics and patterns suggest a bearish outlook.
BNB’s technical chart presents a worrying pattern for investors. Over the past few months, the token has steadily lost value, erasing some of the gains made earlier this year. A bearish pennant pattern has emerged, which typically signals more downside. The chart shows that BNB is currently hovering near the 61.8% Fibonacci retracement level, a point where rebounds usually occur. However, the token remains below critical technical levels, including the Supertrend indicator and the 50-day Exponential Moving Average (EMA).
Source: TradingView
Traders are closely watching the potential for further declines. Should BNB breach the $700 mark, it would complete a 20% drop from its current level, putting the next key target at the 78.6% Fibonacci Retracement level. However, if BNB climbs above the $945 level, this would invalidate the bearish outlook and potentially signal a recovery.
Declining Metrics Point to Weakening Demand
Fundamentally, Binance Coin faces substantial challenges as the broader crypto market continues to struggle. Demand for BNB has significantly weakened, with daily trading volumes falling to just $1 billion on Monday, a sharp decline from the over $15 billion seen earlier this year. The same pattern is evident in the futures market, where open interest has dropped from $2.7 billion in October to $1.26 billion today.
Additionally, Binance Smart Chain (BSC) has seen a significant decrease in activity. The number of transactions on the network has plunged by 80% over the past 30 days, now sitting at only 400 million. The sharp decline in network activity has also led to a 14% drop in total fees over the same period, reducing the number of BNB tokens being burned.
