BNB rises to $600 and traders ask for higher – Does data support this view?

BNB (BNB), the native token of BNB Chain, rose to $614 on September 27, representing an increase of 25.7% over three weeks. This is the first time BNB has closed above this level since June 2024, sparking speculation that the bullish momentum could extend further. However, some market participants attribute the rally to the release of Binance founder Changpeng “CZ” Zhao from US custody after four months of detention.

As BNB’s performance now mirrors the broader altcoin market over the past three weeks, there is little support for the theory that CZ’s release is driving the rally. Nevertheless, some technical analysts suggest that the recent resilience of BNB, which has avoided falling below $500, indicates that the bullish trend may be just beginning. A few even argue that $1,000 could be a realistic target for BNB.

In April, former Binance CEO CZ pleaded guilty to a felony charge related to violations of the Bank Secrecy Act, paid a $150 million fine, and agreed to permanently step down from the exchange’s management. He was sentenced to four months in prison. In November 2023, Binance reached a $4.3 billion settlement with US regulators. CZ acknowledged Binance’s mistakes but emphasized that no user funds were misappropriated.

CZ’s release is unlikely to drive BNB price

While CZ’s legal issues may have attracted attention, they are likely unrelated to BNB’s recent price action, other than the short-term media coverage tied to CZ’s reputation and influence in the crypto community. BNB’s value is largely tied to Binance’s ecosystem, including launchpads incentives, trading fee discounts and within the BNB chain’s decentralized applications (DApps).

To determine whether BNB can reclaim its high of $724 from June 6, one must evaluate the demand for BNB across its ecosystem. More importantly, determining the sustainability of BNB’s price rise requires a comparison of BNB Chain’s performance against competing blockchains such as Ethereum (ETH) and Solana (SOL).

The total value locked (TVL) is a key metric that tracks the deposits locked in a network’s smart contracts, making it a crucial indicator of blockchain activity. For the BNB chain, the TVL has stagnated around 8.2 million BNB in ​​the past two months, according to DefiLlama data. In comparison, deposits on the Ethereum network increased by 8% to 19.2 million ETH, while Solana’s TVL increased by 20% to 35.7 million SOL during the same period.

In terms of DApp volumes, BNB Chain saw a 35% decline, with $26.7 billion in total activity over the past 30 days, according to DappRadar. This trend closely mirrors Ethereum, which experienced a 36% drop to $129.1 billion in the same time frame. Likewise, Avalanche’s DApp volume fell 24%, totaling $1 billion in the 30 days leading up to September 27.

Related: Binance Continues to Serve Russian Users Despite 2023 Exit

BNB chain activity does not stand out from competing blockchains

Despite BNB Chain’s declining volumes, this pattern seems consistent with the broader cryptocurrency market. However, not all DApps require large transaction volumes or deposits to be successful. 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. So, the number of active users is another important measure of a network’s health.

For BNB Chain, the number of active addresses interacting with DApps increased by 4% in the last 30 days, reaching 2.47 million, according to DappRadar. In contrast, the Ethereum network saw a 23% decrease in active addresses, falling to 1.51 million over the same period. Meanwhile, Avalanche’s active addresses increased by 1% to 57,870, while Polygon experienced a 17% decrease in users during this period.

Therefore, there has been no major development in the BNB chain ecosystem that would justify BNB outperforming the broader altcoin market. Moreover, there is no evidence to suggest that the release of CZ from US custody is fueling a price rise. As a result, there is little basis to expect BNB to regain its all-time record in the near term.

This article is for general informational purposes and is not intended to and should not be construed as legal or investment advice. The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.