Binance Coin (BNB) has faced a significant pullback after reaching an all-time high of $793 in December. As of now, BNB is hovering around $700, showing signs of increased profit-taking and weaker market sentiment. The key question now is whether BNB can hold this level, or if further downward pressure will push it lower, potentially below $700.

BNB Faces Retracement After Hitting $793

Following a remarkable rally that took BNB to nearly $800 earlier in the month, the cryptocurrency has cooled off, retracing towards $700. This drop is largely attributed to profit-taking, with traders cashing in on the significant gains made over the last few weeks. Despite this retreat, BNB’s performance has remained relatively steady, with the altcoin fluctuating around the $700 mark.

The timing of this correction is significant, as it coincides with upcoming macroeconomic events, such as the Federal Reserve’s rate decision. The outcome of these decisions could have a considerable impact on market sentiment, influencing whether BNB can defend its current support levels.

Analyzing the $700 Support Level

Technical analysis indicates that BNB has been trading within an ascending channel since November, but the recent price action suggests potential vulnerability. The cryptocurrency has experienced two major consolidations near the 50 EMA (Exponential Moving Average) on the 4-hour chart, each time sliding lower towards the channel’s range-low.

Currently, BNB is fluctuating around the moving average and mid-range, which indicates a weakening momentum. If the price falls below $700, it could signal further downside potential. The Relative Strength Index (RSI) also shows weakening demand, which, combined with a declining Average Directional Index (ADX), suggests a possible drop below $700.

Whales Trim Their Positions

The behavior of large investors, or “whales,” has added to the cautious sentiment. According to data from Hyblock, whales had added positions during BNB’s ATH pump in early December but have since trimmed their holdings. This shift has coincided with the retracement towards $700, further dampening market sentiment.

Additionally, the futures market has shown limited demand. Open Interest (OI) has dropped significantly, shrinking from $800 million to $433 million. This decline in futures activity further signals a short-term bearish outlook for BNB, as reduced demand could lead to a continued downward drift.

Liquidity Hunt Could Push BNB Below $700

Despite the bearish sentiment, the market could experience a liquidity hunt, which might temporarily push BNB below $700. According to Coinglass, there is a significant concentration of leveraged longs at the $690 level, meaning that market makers could target these positions, triggering sell-offs. If this happens, BNB might dip below $700 before attempting to retest higher levels, such as the $734 or $750 liquidity zones.

On the flip side, these liquidity levels could provide an opportunity for BNB to bounce back if market conditions improve. The potential upside at $734 and $750 could attract buying interest, especially if market sentiment turns more favorable.

BNB Price Prediction: What’s Next?

As the market braces for potential volatility, BNB’s price action will be closely tied to broader market trends and investor sentiment. In the short term, weak demand and reduced whale activity could push the altcoin below $700. However, if liquidity at higher levels, like $734 and $750, attracts buying pressure, BNB could make a recovery.

The next few days will be crucial for determining whether BNB can defend the $700 level. If it fails to hold, it could experience further downside, potentially reaching $690 or lower. However, any improvement in sentiment could see the cryptocurrency retesting the $734 and $750 resistance zones.

Conclusion

BNB’s recent retracement is a natural part of its price action after hitting new highs, but the altcoin faces a critical juncture at $700. The combination of weak sentiment, limited demand from whales, and the potential for a liquidity hunt suggests that BNB might struggle to hold this level in the short term. However, if market sentiment improves, BNB could rebound and target the $734 to $750 range. Investors should keep a close eye on market developments and the broader economic landscape to gauge whether BNB can defend its current support or face further declines.