BNB Price Hits $700 All Time-High, Crosses $100B Market Cap, But There’s a Catch

BNB price reached a new all-time high of $701 on Wednesday June 5 2024, after a blistering 20% surge in 3 days, as the Binance backed-coin enters price discovery phase, how long can the bulls sustain the uptrend?

BNB price Surged 20% as CZ Prison Sentence Begins

Over the last 2-years intense regulatory scrutiny surrounding Binance has negatively impacted the exchange’s entire ecosystem. Daily trading volumes declined and the likes of Coinbase and BitGet gained market share, while the growth of its native BNB chain and the BNB coin also lost traction.

But this week, FXEmpire reported how bullish momentum returned to the Binance ecosystem in full-swing, as the long-running case against the SEC came to a head.

On June 1, Binance CEO and Co-Founder Changpeng Zhao began his mandatory 4 month prison sentence in the California, marking the end of a protracted settlement with the US authorities.

The green shaded area in the chart above shows how BNB price has skyrocketed 21.28% since June 1, to reach a global peak of $701 on June 5.

More so, this 21.28% upswing has now driven BNB market capitalization above the $100 billion milestone.

Consequently, the Binance-issued coin has now become only the 4th cryptocurrency to reach that milestone after Bitcoin (BTC) and Ethereum (ETH) and the Tether (USDT).

BNB Flashes $400M Bearish Signal After All-time High

Oddly, the close correlation between the BNB price rally and the start of CZ’s prison term suggest the conclusion of the case may have have triggered a surge in capital inflows.

But while bulls revel in the latest milestone as BNB enters price discovery phase, a rare signal in the derivatives markets threatens to scuttle the rally.

Coinglass’ Open Interest chart below, tracks the total value of capital invested in the futures contracts markets. It provides insights into the impact and sentiment of speculative traders on a cryptocurrency asset’s current price trend.

BNB open interest stood at $594 million at the close of May 31. But since CZ’s prison term began, speculative traders have piled on an unsually high volume of new capital inflows.

At the time writing on June 5, BNB open interests has reach $1.01 billion, reflecting a whopping $405 million surge

Notably, this also shows that while BNB price has only increased 21.28% in the last 5-days, the open interest has recorded a more significant 68% increase.

When open interest faster than the price uptick during a rally, strategic investors consider it an early signal that the market trend in nearing the top.

This faster uptick in Open Interest suggests that the BNB price rally this week has been majorly driven by the activities of speculative traders, rather than organic spot purchases.

More importantly, this outsized $1.01 billion speculative futures contracts heightens the risk of massive liquidations and rapid price downswings when BNB traders begin to book profits.

BNB Price Forecast: Bulls Risk $600 Correction

BNB price is trading at all-time highs above $700 at the time of writing on June 5. But the $405 million surge in the speculative contracts suggests a profit-taking wave could lead to rapid downswings towards $600 in the near-term.

However, the upper-limit Bollinger band technical indicator highlights the $670 price level as the critical short-term support cluster to watch in the days ahead.

If traders booking profits inadvertently trigger widespread liquidations as predicted, the BNB price could sharply retrace towards the 20-day SMA price level at $608.

Conversely on the upside, there’s a fair chance the bulls could seek to extend the rally towards the $750 level, especially if the upward momentum intensifies especially if Non-Farm Payrolls reports expected to be released on Friday, June 7 2024, yields a dovish outcome.