Liquidity Growth on the BNB Chain

Liquidity growth on the BNB Chain has been significant, with a rally to $730 looking feasible on the chart.
Sentiment in the market indicated a bearish force exists, but buying volume could overturn that.

For the first time in over a month, BNB recorded bullish gains on the charts, with the crypto up by almost 2% in 24 hours, recovering from a previous downtrend that saw losses of nearly 17% among investors.

This rally could mark the beginning of a major move, especially if BNB crosses a critical resistance line and selling pressure in the derivatives market cools down. Hence, it is worth exploring BNB’s potential movement in depth.

Liquidity Inflows Strengthen BNB’s Price Movement

According to AMBCrypto’s analysis, there have been notable inflows into the BNB Chain, intensifying recently. These inflows have contributed to its price rally and spurred an uptick in Total Value Locked (TVL).

TVL measures the amount of BNB deposited and locked across different protocols on the BNB Chain. A hike suggests more investors are locking their assets, indicating confidence in a potential price rally.

Between 12-15 March, BNB Chain’s TVL surged by $496 million, representing BNB locked in various protocols. Additionally, the scale of these liquidity inflows correlates with an increase in active addresses during this period.

At the time of writing, active addresses peaked at 1.1 million after hitting a monthly low of 959,200 on 8 March, with the transaction count touching 4.5 million. The growth in these metrics, alongside price and TVL, hinted at buyer dominance across the market.

BNB Faces Key Resistance

The recent price surge has pushed BNB to a resistance line formed since mid-February. On the last two occasions, when the price contacted this resistance, it led to a market decline.

If BNB breaches this level, there’s a high chance the asset will record gains of 23.48%, possibly climbing to $732.

Technical indicators on the chart hint at a potential market rally. At press time, the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) suggested a bullish scenario for the altcoin.

The daily RSI movement indicated the asset might continue to trend higher, particularly as it approached the buy zone above 50. The MACD formed a classic golden cross pattern, where the blue MACD line crosses above the orange Signal line, typically preceding a bullish move.

If this occurs, a BNB breakout could happen in the near term.

Derivatives Data Shows Mixed Sentiment Among Traders

Despite high bullish sentiment, some traders have been selling. At the time of writing, Open Interest in both the Futures and Options markets had dropped by 2.30% and 1.56%, respectively.

A declining Open Interest means that unsettled contracts in the derivatives market might be filled by short traders anticipating a price drop, potentially halting upward movement or causing depreciation on the charts.

However, derivatives traders on Binance and OKX have continued buying, reflected in the long-to-short ratios of 1.43 and 2.18, respectively. A ratio above 1 indicates more buying than selling, with further numbers above 1 suggesting stronger buying volume.

If derivatives traders across these exchanges continue purchasing, the selling pressure from other cohorts in the derivatives market would remain minimal. This is essential for BNB’s price breakout on the charts.