The price of BNB (BNB) has experienced a significant surge of 62% in just 30 days, reaching its highest level in two years on March 8 at $489.50. This increase has not only been driven by gains in the broader market but has also 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 this rally can be sustained.
There were doubts among investors that BNB would ever reach these 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, which cast doubt on the future of the BNB token, as part of its value comes from the Binance exchange ecosystem.
While CZ’s trial is still pending sentencing, the fact that Binance settled with the U.S. Commodity Futures Trading Commission (CFTC) in December 2023 has helped alleviate uncertainty about the future of BNB. As part of the settlement, Binance was required to implement a formalized corporate governance structure, including compliance and audit committees. CZ was also ordered to remain in the U.S. until his sentencing date.
As cryptocurrency volumes reach their highest levels in 12 months, major exchanges like Coinbase have experienced multiple outages, which has sparked criticism from various quarters. Crypto investor @Rampage_Calls expressed frustration with Coinbase’s frequent outages on social media, while Binance trading reportedly remained unaffected.
Vijay Boyapati, a Bitcoin enthusiast and former Google software engineer, compared 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 address these issues promptly, citing similar problems that plagued the exchange during the 2017 cycle.
In comparison, part of Binance’s success in spot and derivatives trading volumes can be attributed to its robust trading engine and servers, which appear more reliable than Coinbase’s. This movement has encouraged users to buy in, taking advantage of reduced trading fees and the opportunity to participate in the exchange’s token launch platform.
While BNB’s rally has been supported by increased activity on the BNB Chain, it is essential to analyze the network’s overall activity. In the past 30 days, the network’s smart contract deposits, measured by the total value locked (TVL), have decreased by 7% in BNB terms. This is in contrast to Ethereum, which has seen a 3% increase in TVL in ETH terms, and Solana, which has experienced a 20% TVL gain during the same period.
It could be argued that certain DApps on the BNB Chain, such as NFT marketplaces and decentralized finance (DeFi) aggregators, do not require large deposit sums. Therefore, measuring volume activity provides a better gauge of network use. Recent data shows 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 necessary to determine whether BNB is likely to reach the $500 level again. However, the initial data suggests a positive outlook.
It is important to note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research before making any decisions.