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- If BNB retraces, traders targeting $340 may be liquidated.
- If the funding rate becomes extremely negative, the price could head towards $400.
The price of Binance Coin (BNB) has joined other cryptocurrencies as the broader market continues to rise. At press time, the price of BNB was $326.93.
However, if AMBCrypto’s observation is correct, traders holding long positions face liquidation risk.
For those of you unfamiliar with the cryptocurrency world, liquidation occurs when a leveraged position is automatically liquidated. This may be due to the trader having insufficient margin balance.
It may also be because the price of the relevant asset has violated the stop loss zone.
This is not the time to make high leverage bets
At press time, AMBCrypto’s analysis of BNB liquidation levels showed a cluster of liquidity from around $329 up to $340.
The liquidation level is the expected price point at which large liquidations may occur. These regions mentioned are marked in blue in the chart below.
Source: HyblockCapital
However, this does not mean that BNB will not hit the price in the near term. However, for traders looking to open long positions, it may be better to use lower leverage.
Using leverage between 25x and 100x can result in wipeout.
HyblockCaptial’s data also showed signals of CLLD (Cumulative Liquidation Level Delta). CLLD is the sum of the difference between all buy and sell liquidation levels.
As of this writing, AMBCrypto has confirmed that CLLD is positive for BNB.
In most cases, this position means the coin may be headed for a full retracement, indicating a bearish bias. In this case, the BNB price could fall to $315.
In terms of trading volume, on-chain data shows an increase of $1 billion. Increased trading volume can be linked to increased interest in the coin.
BNB may bounce, but not now.
If the coin price continues to rise along with trading volume, BNB could rise above $327 in the near term.
However, if the price reverses downward while volume is increasing, BNB may lose its bullish momentum. Therefore, the value may be revised by up to 10% in the coming weeks.
Regarding funding rates, we found the metric to be negative at the time of going to press. According to Santiment, Binance Coin’s funding rate was -0.008%.
Funding rate is the cost of maintaining an open position in the derivatives market. If the indicator is positive, it means that the perp price is trading at a premium compared to the spot price.
Source: Santiment
How much is 1,10,100 BNB worth today?
However, at the time of reporting, BNB’s funding ratio was negative, suggesting that the penalty price was trading at a premium. Despite the negative reading, the reasonable inference here is that the short selling was not aggressive.
So there is now potential for a significant rebound. However, if the indicator becomes extremely high and is likely to reach -0.01%, the BNB price may rebound. In this case, a move towards $400 may make sense.