BNB (BNB), the native token of the BNB Chain, experienced a significant rally in early June, reaching an all-time high of $723 before correcting down to $705. Despite this correction, BNB still gained 19% in the first six days of June, outperforming the overall crypto market. Traders are now seeking indicators to determine if this rally is sustainable and if further bullish momentum can be expected for the BNB price.
The timing of the BNB rally is surprising, considering that the founder of Binance exchange, Changpeng “CZ” Zhao, was recently incarcerated on charges related to money laundering. However, CZ’s imprisonment may limit interference in Binance’s operations and strategy. Despite this, BNB’s current market capitalization of $108 billion represents a 37% premium over competitor Solana (SOL) at $79 billion, raising questions about the valuation difference between the two ecosystems.
Comparing BNB Chain’s activity with that of Ethereum (ETH) and analyzing the level of activity across different chains can provide insights into the sustainability of BNB’s rally above $710. While some analysts suggested that the rally was driven by excessive leverage from derivatives trading, evidence indicates that this may not be the case. BNB futures open interest broke above $1 billion for the first time on June 6, but this does not necessarily point to excessive leverage demand from buyers.
DApps activity on the BNB Chain remains strong, with a 23% surge in volumes in the past seven days. However, the relatively stable number of active addresses raises questions about the actual growth in the user base. BNB Chain’s $6 billion seven-day volume is significantly lower than Ethereum’s $40.5 billion volume during the same period. While on-chain and derivatives data for BNB do not show any warning signs, there is also no strong indication that further price gains are justified, especially with the uncertainty surrounding Binance’s leadership in light of CZ’s incarceration.
In conclusion, the recent rally in BNB’s price has garnered attention from traders and investors, but questions remain about its sustainability. While BNB Chain’s activity and market performance are positive, the long-term implications of CZ’s imprisonment on Binance’s operations are a factor to consider. Traders should proceed with caution and continue to monitor key indicators to assess the potential for further price increases in BNB.
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