BNB has seen a significant increase in value, rising by 12% in the past week and reaching a two-week high of $620 on March 29. While this surge is impressive, it raises questions about whether BNB has reached its peak or if there is potential for further growth.
Compared to its competitor Ether, which saw a 5% increase over the same period, BNB’s surge has closed the gap in valuation between the two. However, insights from on-chain BNB Chain data suggest that the recent rally may have pushed the limits too far.
Factors such as inflows into spot Bitcoin exchange-traded funds (ETFs) have been observed to have a correlation with the overall crypto market’s upward trend. However, there was a setback in this trend for the week ending on March 23, as 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 exiting 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 has since slowed down, with BNB reaching an all-time high valuation of $116 billion in November 2021. Additionally, the total value locked (TVL) on BNB Chain, which represents deposits in the network’s smart contracts, peaked at $15.7 billion but has now fallen to $7.1 billion, a decrease of 55%.
To fully understand the performance of BNB Chain, it is important to consider the overall decline in the crypto market, particularly in decentralized finance (DeFi) since late 2021. The total market data for all tracked blockchains has decreased from nearly $205 billion to $155 billion, indicating a 25% drop. Therefore, a thorough analysis of BNB Chain’s TVL, especially in comparison to competitors like Ethereum and Solana, is necessary.
While TVL is an important indicator of a blockchain’s success, it is not the only one. BNB Chain has numerous active decentralized applications (DApps), including non-fungible token (NFT) marketplaces, gaming platforms, decentralized betting systems, collectible platforms, and social networks. In the past week, almost 2 million active addresses engaged with DApps on the BNB Chain, showing significant activity levels comparable to Ethereum’s most active layer-2 networks.
Forecasting future trends in the cryptocurrency market 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 holding around 0.03%, there is still optimism despite BNB’s struggle to maintain the $620 level. Typically, a positive funding rate above 1.2% per week indicates a bullish market sentiment.
In conclusion, BNB’s recent surge in value has sparked speculation about its future growth potential. While there are some concerns about the limits of this growth, the overall activity on BNB Chain, along with positive market sentiment, suggests that there may still be room for further growth in the future.
