BNB, formerly known as Binance Coin, is trading near $1,100 at press time on Wednesday, after a 3% decline the previous day. Decreased network activity on the BNB chain ecosystem and a nearly 5% decline in futures open interest indicate low demand.
From a technical perspective, if BNB breaks below the 200-period exponential moving average (EMA) on the 4-hour chart, there is a risk of further losses, confirming a breakout of a bearish flag.
Retail, on-chain demand for BNB has diminished
The BNB chain is experiencing a slowdown in network activity, reflecting a decrease in on-chain demand. Typically, when a network fails to generate high volume or revenue, it indicates low demand or outflows to other networks.
According to DeFiLlama, volume on decentralized exchanges (DEX) fell to $2.584 billion on Tuesday, down from an October 8 high of $6.313 billion, indicating less on-chain liquidity.
BNB Chain DEX Vol. Source: Defillama
Additionally, the chain’s revenue dropped from $787,655 on October 8 to $98,294 on Tuesday, confirming the possibility of low demand or capital rotation. If the BNB chain fails to recapture user demand, the value of its utility token could decline further.
BNB Chain Revenue. Source: Defillama
BNB at risk of breaking bearish flag with 25% fall
BNB is above the 200-period EMA at $1,107 on the 4-hour chart, and has formed a local support trendline connecting the October 17 and October 22 lows, which is part of a bearish flag pattern. The 25% pullback from October 13 to October 17 near $820 serves as a downside flagpole for this pattern.
If BNB drops below $1,100, it will confirm a breakout to the downside of the bearish flag. In such a case, the key support levels are $1,021, $932, $860, and $819, marked with the lows of October 17, September 26, October 10, and August 16 on the 4-hour chart. This last level roughly matches the bearish flag chart pattern target.
Additionally, momentum indicators on the 4-hour chart suggest that bearish pressure is increasing, as the Relative Strength Index (RSI) at 42 is below the midline, indicating further scope for correction before reaching the oversold zone.
At the same time, the Moving Average Convergence Divergence (MACD) indicator displays moving average lines in a falling trend, indicating increased selling pressure.
BNB/USDT 4-hour price chart.
On the positive side, a bounce from the 200-period EMA near the $1,100 mark in BNB could recapture the peak of $1,182 from Monday.
Fearing further losses, retail demand for BNB has declined significantly in the derivatives market. Coinglass data shows that BNB futures open interest (OI) has declined by 4.90% over the past 24 hours to $1.70 billion, suggesting that traders are either reducing their exposure or position leverage.
BNB Derivatives Data. Source: CoinGlass
