BNB has seen a significant 12% increase in value over the past week, reaching a high of $620 by March 29. This surge has led to speculation about whether BNB has reached its peak or if there is potential for further growth. In comparison to its competitor Ether, which only saw a 5% increase over the same period, BNB’s surge has closed the valuation gap between the two. However, data from on-chain BNB Chain suggests that the recent rally may have pushed the limits too far.
Factors Affecting BNB’s Price
Market analysts have noticed a connection between the crypto market’s upward trend and inflows into spot Bitcoin exchange-traded funds (ETFs). However, the week ending March 23 saw a setback as these ETFs experienced a net outflow of $890 million for the first time since their introduction in January. Despite this, recent data shows a decrease in outflows from the Grayscale GBTC fund, with only $104 million leaving the fund by March 28.
In early March, BNB’s price surged by 61.7%, reaching a peak of $645 and a market capitalization of $96.4 billion. However, momentum slowed down after that. For context, BNB reached an all-time high valuation of $116 billion in November 2021. The total value locked (TVL) on BNB Chain, representing deposits in the network’s smart contracts, peaked at $15.7 billion but has since dropped to $7.1 billion, a 55% decrease.
Analyzing BNB Chain’s Performance
Given the overall decline in the crypto market, particularly in decentralized finance (DeFi) since late 2021, it is crucial to analyze BNB Chain’s TVL decline. The total market data for all tracked blockchains has decreased from nearly $205 billion to $155 billion, indicating a 25% drop. Therefore, a comprehensive analysis of BNB Chain’s TVL, especially in comparison to competitors like Ethereum and Solana, is essential.
Activity on BNB Chain
TVL is not the only indicator of a blockchain’s success. Numerous decentralized applications (DApps) on the BNB Chain, including NFT marketplaces, gaming platforms, decentralized betting systems, collectible platforms, and social networks, operate without requiring significant deposits. In the past week, almost 2 million active addresses interacted with DApps on the BNB Chain, demonstrating significant activity levels comparable to Ethereum’s most active layer-2 networks.
Predicting Future Trends
Forecasting cryptocurrency trends is challenging, but examining derivative metrics such as the demand for leverage in BNB perpetual futures contracts can provide insights into market sentiment. While the demand for leveraged long positions has stabilized, with the 8-hour funding rate remaining around 0.03%, optimism persists despite BNB’s struggle to break the $620 level. Typically, a positive funding rate above 1.2% per week indicates a bullish market sentiment.
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