Binance's BNB Hits New Record High, Outperforms Broader Crypto Market Amid Declining US Bond Yields
Summary:
Binance's native cryptocurrency, BNB (BNB), reached a new record high of approximately $716, marking a significant increase from its previous values. This substantial growth surpasses the performance of the broader crypto market. The recent surge in BNB, coinciding with declining U.S. bond yields, points to an inverse relationship between BNB's value and bond yields. The diminished yields have led investors to seek potentially higher-risk assets such as cryptocurrencies, boosting BNB's rise. Technical indicators also suggest BNB is in the breakout stage of its ascending triangle pattern. However, analysts note potential signs of upcoming price correction or consolidation.
June 5 saw Binance's native cryptocurrency, BNB (BNB), reach a fresh record high of roughly $716, marking a 4.50% increase within the day and over 14% over the past 24 hours. This noteworthy performance outshone the broader crypto market, which experienced a 3.5% rise in the same 24-hour period.
Cryptocurrency enthusiasts might wonder what's driving BNB's stellar growth surpassing the rest of the digital assets market. Rather than identifiable fundamental triggers, BNB's flow seems to be largely influenced by macroeconomic indicators, along with existing technical trends.
Simultaneously with the recent surge in BNB and the overall crypto market, the yields on U.S. bonds have been exhibiting a downward tendency. The yield on the prime U.S. 10-year Treasury note (US10Y), for instance, fell to 4.332% from 4.63% within five days ending on June 4. This period also witnessed BNB accruing over 20.75% in value, hinting at a definite inverse relationship between BNB and these bond yields.
Yields on U.S. treasury notes have been on a downward trend due to indications of stable, preferred inflation metrics by the Federal Reserve. This is coupled with slower-than-anticipated manufacturing and consumer spending data. A reported unexpected fall in the U.S. job openings on June 4 further contributed to the dip in Treasury yields.
Predictions of diminished inflation has led bond traders to fast-forward their forecast of the Federal Reserve's initial comprehensive 25 basis-point rate decrease from December to November. The reduction of revenue from holding traditionally safer investment avenues such as cash and bonds leads to a surge in interest for potentially higher-risk assets such as cryptocurrencies and stocks. This shift in investor sentiment has arguably fueled the rise of BNB, currently the fourth-largest cryptocurrency by market capitalization.
From a technical perspective, BNB's surge represents the breakout stage of its ongoing ascending triangle pattern. The triangle is confirmed by the combined support of the 20-day (purple) and the 50-day (red) exponential moving averages (EMA).
When a crypto asset is undergoing price fluctuations between an upwardly mobile trendline support and a flat trendline resistance zone, an ascending triangle is formed. The price eventually surpasses the resistance, leading to an upward trend equivalent to the triangle's maximum height.
As of June 5, the price of BNB was pushing past the triangle's resistance line with a possible surge aiming at approximately $800, a cool 15% hike from current pricing. However, on the downside, BNB's daily relative strength index (RSI) has penetrated the overbought area of 70, which may indicate a potential price correction or consolidation in the coming month of June. Moreover, with the price testing the 1.618 Fibonacci retracement line around $708 as resistance, correction towards the 1.00 Fib retracement line at approximately $630 seems plausible, which would mean a 11.50% drop from present price levels.
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Published At
6/5/2024 2:49:54 PM
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