BNB price hits 2-year high, but what’s supporting the bullish momentum?
BNB (BNB) price increased by 62% in 30 days and reached the highest level in 2 years on March 8 at $489.50. This move may have been driven by gains in the broader market, but it strengthened BNB as the third largest cryptocurrency by market capitalization, excluding stablecoins. Some traders speculate that BNB's price break above $500 is inevitable, but can the rally continue?
Binance and CZ futures may negatively affect the price of BNB.
Especially after Binance founder and former CEO Changpeng “CZ” Zhao entered into a plea agreement with the United States Federal Court in November 2023 to allow users involved in illegal activities to transfer “stolen funds”, many investors doubted that BNB could regain its current level. Through the exchange. At that time, CZ agreed to step down as CEO, which cast doubt on the future of the BNB token, part of the price from the Binance exchange ecosystem.
The CZ trial is still awaiting sentencing, but Binance's settlement with the US Commodity Futures Trading Commission (CFTC) in December 2023 has helped to ease uncertainty about BNB's future. Binance is mandated to implement a formal corporate governance structure, including compliance and audit committees. Meanwhile, CZ has been ordered to remain in the US pending his sentencing.
As cryptocurrency volumes surged to their highest levels in 12 months, some major exchanges, including Coinbase, experienced multiple outages, drawing criticism from various quarters. Crypto investor @Rampage_Calls took to social media to lament Coinbase's frequent outages, while Binance's trading was reportedly unaffected.
Vijay Boyapati, a Bitcoin enthusiast and former Google software engineer, likens Coinbase's inability to provide liquidity during market rallies to MtGox, the failed exchange that once dominated the market until it was defunct. Vijay urged Coinbase founder and CEO Brian Armstrong to “fix this ASAP,” citing similar issues that plagued the exchange in the 2017 cycle.
In a sense, part of Binance's success, driving leadership in spot and derivatives trading volumes, stems from its strong trading engine and servers – at least when compared to Coinbase. As such, this activity encourages users to purchase, which can benefit from reduced transaction fees and participate in the exchange's token launch platform.
BNB rally is powered by BNB Chain activity.
However, most of BNB's utility comes from the BNB Chain, which makes it sensible to analyze network activity. The network's smart contract deposits, measured in Total Value Locked (TVL), have decreased by 7% in BNB terms over the past 30 days.
Data shows that 12.8 million BNB are deposited in BNB Chain decentralized applications (DApps), which is significantly lower than the 19.4 million recorded in early 2023. For comparison, the Ethereum network's TVL has increased by 3% over the past 30 days. Solana received 20% of TVL's profits during the same period.
One could argue that some DApps, such as NFT marketplaces and decentralized finance (DeFi) aggregators, do not require large deposits. Therefore, measuring voice activity provides a better measure of network utilization.
The recent rally in BNB price appears to be the result of BNB Chain's 41% DApp volume over the past 30 days and especially the third level overall. Additionally, BNB Chain stands out when analyzing active addresses engaging with DApps, which reached an impressive 5.6 million.
A more in-depth analysis of the quality of the BNB Chain movement and its possible impact on the Binance exchange after the CZ test is necessary to determine whether BNB is ready to return to the $500 level. However, the baseline data looks grim.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
