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Cryptocurrency News Articles

BNB Plunges as Bearish Sentiment Grips Market, Funding Rates Tank and Indicators Point to Downtrend

Apr 04, 2024 at 10:00 am

With a recent negative Funding Rate, Binance Coin (BNB) is experiencing a surge in bearish sentiment in its Futures market. This indicates an increase in traders holding short positions, suggesting an expectation of a price decline. Negative Funding Rates and a decline in Futures Open Interest further reinforce the bearish trend. Key indicators on BNB's price chart, such as the Directional Movement Index (DMI) and MACD, also point towards a continued bearish momentum in the short term.

BNB Plunges as Bearish Sentiment Grips Market, Funding Rates Tank and Indicators Point to Downtrend

BNB Faces Bearish Sentiment as Funding Rates Turn Negative, Indicators Point to Downtrend

The cryptocurrency market has witnessed a shift in sentiment towards Binance Coin (BNB), as evidenced by the recent negative turn in its Funding Rates. This development suggests that an increasing number of traders anticipate a decline in BNB's price, signaling a bearish outlook for the asset.

Funding Rates, a mechanism employed in perpetual Futures contracts, play a crucial role in maintaining the contract price close to its spot price. When an asset's contract price exceeds its spot price, traders with long positions pay a fee to those holding short positions, resulting in positive Funding Rates. Conversely, if the contract price falls below the spot price, short traders pay a fee to long traders, leading to negative Funding Rates.

An analysis of data from Coinglass reveals that BNB's Funding Rates have turned negative, indicating a rise in short positions among traders. As more traders bet on a price decline, the negative Funding Rates signal a growing bearish sentiment in the market.

In alignment with the negative Funding Rates, BNB's Futures Open Interest has also witnessed a slight decrease of 0.16%. This suggests that traders are closing their positions rather than opening new ones, reinforcing the notion of bearish expectations.

Key Indicators Confirm Bearish Trend

An examination of BNB's price chart on a 1-day timeframe further supports the bearish outlook. The Directional Movement Index (DMI) indicates that the negative directional index is currently above the positive index, suggesting that bearish momentum is prevailing in the market. Traders often interpret this as a signal to exit long positions and open short positions.

Additionally, the Moving Average Convergence Divergence (MACD) line is positioned below its signal line and poised to cross the zero line, indicating a downtrend. This technical indicator suggests that sellers are regaining control of the market, potentially leading to a further decline in BNB's price.

Conclusion

The combination of negative Funding Rates, declining Futures Open Interest, and bearish technical indicators suggests that BNB is facing short-term headwinds. Traders should exercise caution and consider adjusting their positions accordingly. The bearish sentiment dominating the market may drive the asset's price lower in the near future.

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