BNB Chain DEX Volumes Down 24% In Week – Is BNB In Trouble?
The BNB Chain's native token, BNB (BNB), fell 16.1% between August 23 and September 2, from a high of $598.80 to a low of $502.10. However, significant buying activity was seen below $510, which helped BNB recover some of its losses to currently trade at $517.
Investors are concerned that BNB has entered a bear market, especially since the token has not been held above $610 since mid-June.
The decrease in activity on the BNB chain will create selling pressure
BNB chain parameters, especially decentralized exchange (DEX) volumes indicate that interest is decreasing. Therefore, traders are wondering if the $400 level from August 5th could be retested.
Some market participants suggest that BNB will break out of its consolidation pattern after the release of its co-founder and former CEO, Changpeng “CZ” Zhao, from imprisonment in the United States. Although there is no direct correlation between CZ and the price of BNB, its strong personality and the speculation surrounding its release can influence the market.
Source: Degen.eth
As the head of Binance has pleaded guilty to money laundering charges and is expected to be released after four months in prison, X user degen.eth, an anonymous altcoin trader, shared his opinion by predicting a rise in the price of BNB.
Despite the appearance of this “crazy green candle”, traders are likely to try to get a head start on the event, buying before the CZ breaks out and taking profits as the day approaches. Therefore, buying BNB only based on waiting for the CZ release seems risky, especially with the recent weakness in BNB Chain activity.
From a broader perspective, despite its recent underperformance, BNB is the third largest cryptocurrency by market capitalization – excluding stablecoins – currently valued at $75.7 billion. For context, this represents a 23% premium over SOL's ( SOL ) market cap of $61.5 billion.
Interestingly, the Solana network holds higher deposits in smart contracts than the BNB Chain. To make matters worse, BNB Chain's total value locked (TVL) recently dropped to its lowest level since February 2021, suggesting investors are looking for better opportunities elsewhere, with total cryptocurrency TVL up 27% in 2024.
BNB Chain TVL in BNB terms. Source: Defillama
Data shows that total deposits in BNB Chain smart contracts fell to 7.5 million BNB on August 20, a 14% drop in three months. Notable declines include PancakeSwap, the leading DEX, whose TVL dropped by 15% to 2.93 million BNB, and decentralized startup PinkSale, which saw a 26% drop in TVL.
To put this in perspective, Ether (ETH) contracts increased by 7% in Ethereum network TVL between May 20 and August 20, while Solana network deposits increased by 28% in SOL during the same period. Thus, the factors driving investors away from BNB Chain decentralized applications (DApps) appear to be unique to this network.
Related: Ethereum Layer-1 Network Revenue Fails. What brought him?
BNB Chain is losing ground in DEX activity, which is a concern
Data from Defilama shows that BNB Chain DEX volumes fell by 24% in the seven days to September 2, significantly underperforming Ethereum, which saw a 4% decline in activity over the same period. At the same time, the number of active addresses working with BNB Chain smart contracts has decreased by 18% and Ethereum has shown a 5% decrease.
More concerning, according to Dapradar data, all the top five BNB Chain DApps experienced a significant drop in active users during those seven days. This includes Move Stake, Treasure Ship Game, PancakeSwap, StarryNift and Galxe, indicating that the decline has affected games, bundled services, DEXs and web3 applications.
Essentially, part of BNB's recent price decline appears to be related to reduced activity and deposits on the BNB chain. While this does not rule out the hypothesis that BNB could return to $600 as a result of CZ's release, it does suggest that there is little fundamental reason to be bullish.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
