BNB has reached a new all-time high today, driven by revitalized bullish sentiment and new capital inflows into risk assets due to a weakening US dollar.
However, on-chain data reveals a different narrative. User activity on the BNB Chain has been steadily declining since late September, indicating weakening user demand despite the price increase. What does this imply?
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BNB’s Bull Run Faces Risk
BNB’s price has increased by 25% in the past week, making it the top performer among the five largest cryptocurrencies by market capitalization. This sizable rally brought the token to a new all-time high of $1,263 earlier today.
Nonetheless, there’s a caveat. On-chain data shows that while BNB’s price has surged, user activity on the BNB Chain has been on a downward trend.
For instance, Glassnode data indicates that the daily count of new addresses on the BNB Chain has fallen by 57% since September 24, marking a significant slowdown in network growth.
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A decline in new addresses indicates diminishing demand and reduced user participation. Typically, new addresses rise alongside price during healthy market rallies as more users engage.
Thus, the divergence observed in BNB’s case suggests that the price increase is not fueled by new demand for the coin or increased network activity, putting it at risk for a pullback soon.
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BNB Bulls Are Losing Steam
Additionally, readings from BNB’s Relative Strength Index (RSI) suggest potential buyer exhaustion, which could lead to a price correction shortly. As of now, this momentum is at 75.79, indicating that the altcoin is overbought and its upward momentum may soon wane.
The RSI indicator measures an asset’s overbought and oversold market states. It ranges from 0 to 100, where values above 70 indicate that the asset is overbought and may see a price decline. Conversely, values below 30 suggest that the asset is oversold and could rebound.
With a RSI of 75.79, BNB’s indicator shows it is becoming quite overbought. In the absence of substantial demand supporting the rally, a pullback seems imminent.
BNB Faces $1,100 Test
Without a revival in network activity to support BNB’s price trends, it may fall towards $1,100. If this critical support level fails, the coin’s price could dive to $971.80.
Nevertheless, if macro momentum strengthens or actual demand for BNB increases, its price could set a new peak in the upcoming trading sessions.
