BNB (BNB) price surged by 62% in 30 days after hitting its highest level in 2 years on March 8 at $489.50. This movement may have been driven by gains in the broader market, but it solidified BNB as the third-largest cryptocurrency by market capitalization, excluding stablecoins. Some traders anticipate that BNB's price breaking above $500 is inevitable, but can the rally be sustained?
Binance and CZ’s future could negatively impact the BNB price
Many investors doubted BNB could ever reclaim the current levels, especially after Binance’s founder and former CEO Changpeng “CZ” Zhao entered a plea deal with the United States federal court in November 2023 for allowing exchange users involved in illicit activities to transfer “stolen funds” through the exchange. At that time, CZ agreed to step down as CEO, casting doubt on the future of the BNB token given that part of its value stems from the Binance exchange ecosystem.
CZ’s trial is still pending sentencing, but the fact that Binance settled with the U.S. Commodity Futures Trading Commission (CFTC) in Dec 2023 helped alleviate uncertainty about BNB’s future. Binance was mandated to implement a formalized corporate governance structure, including compliance and audit committees. Meanwhile, CZ was ordered to remain in the U.S. until his sentencing date.
As cryptocurrency volumes surge to their highest levels in 12 months, some major exchanges, including Coinbase, experienced multiple outages, sparking criticism from various quarters. Crypto investor @Rampage_Calls lamented Coinbase’s frequent outages on social media, while Binance trading reportedly remained unaffected.
Vijay Boyapati, a Bitcoin enthusiast and former Google software engineer, likened Coinbase's inability to provide liquidity during market rallies to MtGox, the bankrupt exchange that once dominated the market until its lack of proper structure led to a hack. Vijay urged Coinbase’s co-founder and CEO Brian Armstrong to “fix this ASAP,” citing similar issues that plagued the exchange during the 2017 cycle.
In a way, part of Binance’s success, driving leadership in spot and derivatives trading volumes, stems from its robust trading engine and servers — at least when compared to Coinbase. Consequently, this movement encourages users to buy in, aiming to benefit from reduced trading fees and the ability to participate in the exchange’s token launch platform.
BNB rally has been backed by increased BNB Chain activity
However, much of the utility of BNB comes from the BNB Chain, making it sensible to analyze the network activity. The network’s smart contract deposits, measured by the total value locked (TVL), decreased by 7% in the past 30 days in BNB terms.
Data reveals that 12.8 million BNB has been deposited in BNB Chain’s decentralized applications (DApps), which is significantly lower than the 19.4 million recorded in early 2023. For comparison, Ethereum network TVL increased by 3% in ETH terms over the past 30 days, while Solana experienced a 20% TVL gain in the same period.
One could argue that certain DApps, such as NFT marketplaces and decentralized finance (DeFi) aggregators, do not necessitate large deposit sums. Therefore, measuring volume activity provides a better gauge of network use.
The recent rally in BNB’s price appears justified by BNB Chain’s 41% DApp volume gains in the past 30 days, and, notably, its third-place ranking overall. Furthermore, BNB Chain stands out when analyzing the number of active addresses engaging with its DApps, reaching a remarkable 5.6 million.
A more thorough analysis of the quality of BNB Chain’s activity and the potential impact on the Binance exchange after CZ’s trial is necessary to determine whether BNB is poised to reclaim the $500 level. Nonetheless, the initial data seems bullish.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.