Crypto Update: Inverse Relationship of Bitcoin and Binance Coin

Every story that has captivated the imagination of the modern man features a scintillating protagonist going up against a menacing antagonist. For all the strength, tenacity, or intelligence of the hero, it is often matched, if not, exceeded by the antihero. We see this relationship embodied between fictional characters; Batman and the Joker, Professor X and Magneto, Neo and Agent Smith, and many others.

No one is greater than the other; just two entangled forces moving in opposite directions. In the cryptocurrency world, no pair share this relationship more tangibly than Bitcoin (BTC/USD) and Binance Coin (BNB/BTC). In this article, we show the inverse relationship of Bitcoin and Binance Coin.

A Tale of Two Reversals – Bitcoin vs. Binance Coin

On December 27, 2017, Bitcoin was just coming off of an all-time high of $19,891. Investors were euphoric. Even though the market was up by over 1,957% for the year, gurus and experts urged people to buy the dip. The correction was temporary, they said, as Bitcoin’s year-end-target was around $22,000.

They were wrong because on that day, BTC/USD printed its first lower high in months. The lower high was the first sign that the bull run was over.

BTC/USD daily chart in December 2017

While BTC/USD was showing signs of exhaustion, BNB/BTC broke out of a rounding bottom reversal pattern on the daily chart. It signaled the start of the pair’s seven-month uptrend.

BNB/BTC daily chart in December 2017

Uncanny Trend Continuation Timing

With a lower high in place, Bitcoin began to unravel. On March 5, 2018, it generated another lower high of $11,700. Two months later, it created another lower high of $9,990 on May 5. Bears were in full control of the market.

BTC/USD lower highs

On the other hand, BNB/BTC was on a bullish rampage. The pair generated a higher low on March 7, 2018 of 0.0008325. Exactly two months later, on May 7, BNB/BTC posted another higher low of 0.0014002.

BNB/BTC higher lows

The correlation and the timing is uncanny. For Bitcoin, the lower high signalled not only the start of a bearish rally but apparently, also a higher low setup for Binance Coin. This happened twice and on both occasions, Binance Coin posted higher lows two days after Bitcoin generated lower highs.

Fortunes Reverse Once More

By late June, gloom and doom Bitcoin forecasts circulated the internet. Many were predicting that Bitcoin would hit $4,000 levels while some predicted a move down to $2,000. As we all know, none of that happened as Bitcoin managed to bounce on June 29 after coming off a low of $5,755. The bounce catapulted the market to as high as $8,506.7 on July 24.

Recent rally of BTC/USD

Interestingly, BNB/BTC ended its bull run on June 29 after it breached 0.0024 support. This triggered the double top pattern on the daily chart and started a selling frenzy. Exactly one month later on July 24, the pair bottomed out at 0.0014286.

Recent bear run of BNB/BTC

At this point, the inverse relationship between Bitcoin and Binance Coin has made itself obvious. If you want to know where Bitcoin is going, one indication would be to look at the performance of Binance Coin and expect the opposite results. The same is true for Binance Coin.

Bottom Line

Bitcoin and Binance Coin seems like two entangled forces moving in opposite directions. If Bitcoin/US Dollar climbs, expect Binance Coin/Bitcoin to drop. On the other hand if Binance Coin/Bitcoin bounces, Bitcoin/US Dollar will most likely correct. It appears that the inverse relationship between the two is obvious by now.

Featured image courtesy of Shutterstock. 

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.