Technical patterns on Binance Coin (BNB) indicate that the digital currency is set for a price reversal. In the meantime, it is still floundering around in the market. Despite maintaining strong fundamentals within the cryptocurrency sector, BNB's price action has remained range-bound throughout the year. One of the largest token burns yet is coming soon. Having seen some positive technical indicators, the cryptocurrency is preparing to make a significant move. The BNB Smart Chain is preparing to launch its most significant token burn, valued at $1 billion. This huge move will reduce its circulating supply and likely result in an increase in price.
Technical Analysis Points to Potential Rebound
The Binance Coin price chart indicates a bubble. It has a long horizontal resistance connecting two upper tops, a rounded bottom, and a handle-like base. Recent price action that started in January creates a pattern that resembles the handle portion of a classic cup-and-handle setup. Technical analysts watch this pattern like hawks since it indicates bullish formation.
Additionally, BNB’s recent price action has created a symmetrical triangle/coil pattern, which is defined by converging trendlines. When these lines get close enough together, a breakout is usually right around the corner. This can be a bullish or bearish sign and is an early indication of a changing momentum. These technical formations suggest that Binance Coin, despite its current stagnant price, may be on the cusp of a significant move.
Token Burn Mechanism and its Impact
Binance Coin uses a token burn mechanism, which has burned tokens worth more than ₿174 million already. This mechanism burns tokens in relation to the number of blocks produced per quarter. It is based on the BNB Smart Chain. The quarterly burn process is the most important part of this system.
Token burns are typically viewed positively for Binance Coin. They both reduce the circulating supply, increasing scarcity and improving staking yields. The burn profile of the upcoming burn is currently valued at more than $1 billion. This event will further compress the circulating supply of BNB, potentially even more. Longer term, these burns are intended to meaningfully lower the total circulating supply. We are hoping to reduce it from 140 million to only 100 million BNB tokens.
Network Activity and Fundamentals
Though Binance Coin’s price has held steady over the last month, its underlying network is showing signs of healthy usage. Led by PancakeSwap, the BNB Smart Chain facilitated transactions totaling over $6 billion in volume on a recent Friday, highlighting the network's utility and adoption. In fact, Binance Coin has produced closer to $20 million worth of fees over the last 12 months. This astonishing number is a reflection of the high value economic activity supported by the ecosystem.
According to recent data, Binance Coin generated an amazing $334 billion in adjusted transaction volume to lead this category. This figure makes clear its importance in the broader cryptocurrency market. All these basic elements make up a great foundation for Binance Coin’s future. When you factor in the forthcoming token burn and exciting technical fundamentals, things start to look even more bullish.
