The price of BNB (BNB) has experienced a significant surge of 62% in just 30 days after reaching its highest level in 2 years on March 8 at $489.50. This rise in price has solidified BNB as the third-largest cryptocurrency by market capitalization, excluding stablecoins. While some traders believe that BNB breaking above $500 is inevitable, the question remains whether the rally can be sustained.
There were doubts among investors that BNB could ever reach its 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. CZ was accused of 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 as its value is closely tied to 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 December 2023 has helped alleviate uncertainty about BNB’s future. As part of the settlement, Binance was required to implement a formalized corporate governance structure, including compliance and audit committees, while CZ was ordered to remain in the U.S. until his sentencing date.
Amidst the surge in cryptocurrency volumes, some major exchanges like Coinbase experienced multiple outages, leading to criticism from various sources. A Bitcoin enthusiast and former Google software engineer, Vijay Boyapati, likened Coinbase’s lack of liquidity during market rallies to MtGox, the bankrupt exchange that once dominated the market. Vijay urged Coinbase’s co-founder and CEO Brian Armstrong to address this issue, citing similar problems that plagued the exchange during the 2017 cycle. In contrast, Binance trading reportedly remained unaffected by such outages.
Part of Binance’s success in spot and derivatives trading volumes can be attributed to its robust trading engine and servers, which are considered better than those of Coinbase. This has encouraged users to buy in, as they can benefit from reduced trading fees and participate in the exchange’s token launch platform.
While BNB’s rally has been supported by increased activity on the BNB Chain, it is important to analyze the network’s activity to understand its utility. The total value locked (TVL) in the BNB Chain’s smart contract deposits has decreased by 7% in the past 30 days. In comparison, the Ethereum network’s TVL increased by 3% in ETH terms during the same period, while Solana experienced a 20% TVL gain.
It can be argued that certain DApps on the BNB Chain, such as NFT marketplaces and DeFi aggregators, do not require large deposit sums. Therefore, measuring volume activity provides a better indication of network usage. The recent rally in BNB’s price is supported by a 41% increase in DApp volume on the BNB Chain in the past 30 days, placing it in third place overall. Additionally, the number of active addresses engaging with BNB Chain’s DApps has reached an impressive 5.6 million.
A more comprehensive analysis of the quality of BNB Chain’s activity and the potential impact of CZ’s trial on the Binance exchange is needed to determine whether BNB is likely to surpass the $500 level. However, the initial data suggests a bullish trend.
It is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their own research before making any decisions.