BNB Chain’s native token, BNB (BNB), soared to $614 on September 27, marking a 25.7% gain in three weeks. BNB closed above this level for the first time since June 2024, sparking speculation that the bullish momentum could expand further. However, some market participants said the rally was driven by the release of Binance founder Changpeng “CZ” Zhao from US custody after being detained for four months.
BNB/USD (blue) vs. altcoin market cap (green). Source: TradingView
Since BNB’s performance closely mirrors the broader altcoin market over the past three weeks, there is little support for the theory that CZ’s launch is driving the rally. Nonetheless, some technical analysts suggest that BNB’s resilience, which has not dipped below $500 recently, means that the bullish trend is just beginning. Some argue that $1,000 could be a realistic target for BNB.
source: kingpin encryption
Last April, former Binance CEO CZ pleaded guilty to felonies related to violating the Bank Secrecy Act, agreed to pay a $150 million fine and permanently step down from his role as exchange manager. He was sentenced to four months in prison. In November 2023, Binance reached a $4.3 billion settlement with U.S. regulators. CZ acknowledged Binance’s mistake but emphasized that no user funds were misappropriated.
CZ’s release is Probably not driving BNB price
CZ’s legal troubles may have garnered attention, but they likely have nothing to do with BNB’s recent price action beyond short-term media coverage related to CZ’s prominence and influence in the cryptocurrency community. BNB’s value is largely tied to Binance’s ecosystem, including Launchpad incentives, transaction fee discounts, and decentralized applications (DApps) on the BNB Chain.
To assess whether BNB can recover from its June 6 all-time high of $724, we need to assess the demand for BNB across the ecosystem. More importantly, determining the sustainability of BNB price growth requires comparing the performance of the BNB chain to competing blockchains such as Ethereum (ETH) and Solana (SOL).
Total Locked Value (TVL) is a key metric that tracks deposits locked in smart contracts on the network and is an important indicator of blockchain activity. For the BNB chain, TVL has been stuck at around 8.2 million BNB over the past two months, according to DefiLlama data. In comparison, deposits on the Ethereum network increased 8% to 19.2 million ETH, and Solana’s TVL increased 20% to 35.7 million SOL over the same period.
In terms of DApp volume, BNB Chain has seen a 35% decline in total activity over the past 30 days, with $26.7 billion, according to Dapp Radar. This trend closely mirrors that of Ethereum, which fell 36% to $129.1 billion over the same period. Similarly, Avalanche’s DApp volume fell 24%, reaching a total of $1 billion in the 30 days ending September 27.
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BNB chain activity is less noticeable than competing blockchains.
Despite the decline in trading volume on the BNB chain, this pattern appears to be consistent with the broader cryptocurrency market. However, not all DApps require large trading volumes or deposits to succeed. Sectors such as non-fungible token (NFT) marketplaces, collectibles, mini-games, social networks, prediction platforms, and other web3 services often prioritize user engagement over transaction volume. Therefore, the number of active users is another important measure of network health.
According to DappRadar, for the BNB chain, the number of active addresses interacting with DApps has increased 4% over the past 30 days, reaching 2.47 million. In contrast, active addresses on the Ethereum network decreased by 23% to 1.51 million over the same period. Meanwhile, Avalanche’s active addresses increased 1% to 57,870, while Polygon saw a 17% decline in users during the period.
Therefore, there has not been significant progress in the BNB chain ecosystem to justify BNB outperforming the broader altcoin market. There is also no evidence that CZ’s release in the U.S. is fueling the price surge. As a result, there is little reason to expect BNB to recover to its all-time highs in the near term.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.