BNB, a notable cryptocurrency in the digital market, has witnessed a remarkable surge of 12% in value over the week leading up to March 29, reaching an almost two-week high of $620. This increase has brought it closer in valuation to its main competitor, Ether, which experienced a 5% gain during the same period. However, this rally’s sustainability is under scrutiny, with mixed signals emerging from on-chain BNB Chain data.
Analysts attribute the recent upward trend in the cryptocurrency market, including BNB’s price surge, to inflows into spot Bitcoin exchange-traded funds (ETFs). Notably, these ETFs saw a significant setback in the week ending March 23, with a net outflow of $890 million. In contrast, the Grayscale GBTC fund reported a substantial decrease in outflows, amounting to just $104 million on March 28.
In early March, BNB’s price skyrocketed by 61.7%, peaking at $645 with a market capitalization of $96.4 billion. This figure contrasts with its all-time high valuation of $116 billion in November 2021. The Total Value Locked (TVL) on BNB Chain, indicating deposits in the network’s smart contracts, reached $15.7 billion at its peak but has since plummeted by 55% to $7.1 billion.
The decline in BNB Chain’s TVL reflects a broader contraction in the decentralized finance (DeFi) market since late 2021. Total market data for all blockchains, once nearly $205 billion, now stands at about $155 billion, marking a 25% decrease. BNB Chain’s TVL, specifically, has seen a 10% drop over two months, in stark contrast to Ethereum’s 8% increase and Solana’s 29% rise, as reported by DefiLlama.
However, TVL should not be the sole indicator of blockchain success. BNB Chain boasts nearly 2 million active addresses engaging with DApps on its network in just the past week, rivaling Ethereum’s most active layer-2 networks in activity levels. Solana may have 14% more active addresses, but BNB Chain surpasses both Solana and Ethereum in seven-day trading volume, recording $12.4 billion with an 11% increase.
Predicting future trends in cryptocurrency remains challenging, but derivative metrics, such as the demand for leverage in BNB perpetual futures contracts, offer insights. The steady 8-hour funding rate of around 0.03%, or about 0.6% weekly, indicates a stable demand for leveraged long positions. While the market shows optimism, BNB’s struggle with the $620 level continues to be a key focus for investors and market watchers.
