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The Binance Coin (BNB) token retreated for five consecutive days even as the network executed another big burn. It retreated from a high of $611.4 on Oct. 29 to a low of $562, its lowest point since Oct. 14.
The BNB token retreat has coincided with a drop of the crypto fear and greed index, which has moved from the greed zone of 67 last week to the neutral point of 55.
Most coins have suffered a harsh reversal as well. After rising to $73,500 last week, it has dropped to $68,430, triggering a major dive among other coins. Ethereum fell to $2,443, and could continue falling, as I predicted.
Solana has also crashed below $160, while XRP plunged to $0.50. In most periods, Bitcoin and most altcoins retreat when the fear and greed index is moving downwards.
US election ahead
The first reason why the BNB token has retreated is the upcoming US election, in which Donald Trump will face off with Kamala Harris on Tuesday.
Unlike other elections, polls show that this one will be closer than expected. According to the New York Times, Harris leads the national polling average by less than 1%, meaning that it is in a virtual tie.
The two are even in Pennsylvania, while Donald Trump leads Georgia, Nevada, Arizona, and North Carolina with less than 3%.
Therefore, these polls mean that the election result will likely go either way. However, in the past, polls have not been accurate in predicting the US election. For example, in 2016, most polls predicted that Hillary Clinton would be the eventual winner.
Similarly, before the last midterm election, most polls were predicting a clean sweep by the Republicans, which did not happen.
Meanwhile, the prediction market is predicting that Trump will win the election. However, his Polymarket odds have dropped sharply in the past few days. Last week, these odds peaked at 67, and have now pulled back to 55.
Ideally, the crypto market seems to be favoring Trump to win the election because of his pledge to deploy a light-touch regulatory environment. One of his first steps will be to fire Gary Gensler and replace him with a more conservative SEC leader.
The other potential factor will be the Supreme Court, where Trump would appoint conservative justices. Historically, these justices tend to favor businesses.
However, the reality is that cryptocurrencies like BNB token will do well under both presidents. Besides, historically, cryptocurrencies do well when either parties are in power.
Binance Smart Chain losing market share
Meanwhile, the BNB token retreated even after the developers executed another big token burn that eliminated 1.77 million tokens worth over $1.07 billion.
A token burn is a situation where they are moved to an inaccessible wallet. It is one of the best ways of reducing the amount of BNB tokens in circulation, making the remaining ones more valuable.
A token burn is the opposite of an unlock where new tokens are released in the market. According to CoinGecko, BNB has a circulating supply of 145 million against a maximum supply of 200 million.
Data shows that the BNB Smart Chain has lost some market share in the decentralized finance (DeFi) industry. According to DeFi Llama, the BSC Chain DEX networks handled tokens worth $24 billion in October, much lower than what Solana, Ethereum, and Base handled.
BNB handled $5 billion in volume in the last seven days, making it the fourth-biggest chain in the industry.
More data shows that Base is catching up with BNB in the DeFi industry, where it has a total value locked of $4.45 billion.
BNB price forecast
BNB chart by TradingView
The daily chart shows that the BNB token has pulled back in the past few days. This retreat happened after it retested the important resistance level at $605, where it has failed to move above since June last year. This price is the horizontal part of the ascending triangle pattern.
It is also the neckline of the inverse head and shoulders pattern, a popular reversal sign in the market.
The BNB token is between the 23.6% and 38.2% Fibonacci Retracement levels. Therefore, because of the inverse H&S pattern, the coin will likely have a bullish breakout, with the next point to watch being at $605.
A break above that level will point to more gains, with the next level to watch being at $720, the highest point this year, and 28% higher than the current level.
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