BNB experienced a notable 12% increase in value over the past week, reaching a nearly two-week high of $620 by March 29. While this surge is impressive, it sparks speculation as to whether BNB has peaked or is poised for further growth. Compared to its competitor, Ether, which rose 5% during the same period, BNB’s surge has narrowed the valuation gap between the two. However, insights from on-chain BNB chain data suggest that the recent rally may have pushed the limits too far.
Factors affecting BNB price
Market analysts observe a correlation between the upward trajectory of the cryptocurrency market and inflows into spot Bitcoin exchange-traded funds (ETFs). However, the week ending March 23 suffered a setback as these ETFs experienced net outflows of $890 million for the first time since their introduction in January. Nonetheless, recent data shows that outflows from the Grayscale GBTC fund have declined, with just $104 million leaving the fund as of March 28.
In early March, the price of BNB soared 61.7%, reaching a high of $645 and a market capitalization of $96.4 billion. However, momentum has since slowed. For context, BNB reached an all-time high valuation of $116 billion in November 2021. Specifically, the total value locked (TVL) of the BNB chain, which represents smart contract deposits on the network, peaked at $15.7 billion but has since fallen to $7.1 billion. , representing a 55% reduction.
Contextualization of BNB chain performance
Considering the overall decline in cryptocurrency markets, especially decentralized finance (DeFi) since the end of 2021, it is important to contextualize the decline in TVL on the BNB chain. Total market data for all tracked blockchains decreased from approximately $205 billion to $155 billion, a 25% decline. Therefore, a thorough analysis of TVL on the BNB chain is needed, especially against competitors such as Ethereum and Solana.
BNB Chain Activity
TVL is not the only indicator of blockchain success. Numerous decentralized applications (DApps) on the BNB chain, encompassing non-fungible token (NFT) marketplaces, gaming platforms, decentralized betting systems, collectible platforms, and social networks, operate without significant deposits. Last week, nearly 2 million active addresses associated with DApps on the BNB chain showed significant activity levels comparable to Ethereum’s most active layer 2 network.
Forecasting future trends
Predicting cryptocurrency trends is difficult, but examining derivative indicators, such as leverage demand for BNB perpetual futures contracts, can provide insight into market sentiment. Optimism remains despite BNB’s price struggling at $620 levels while demand for leveraged long positions has stabilized, keeping the 8-hour funding rate at around 0.03%. Typically, a positive funding rate of 1.2% or more per share indicates a bullish market mood.
Featured Image: Freepik
Please see disclaimer