Binance Coin Value Increases by 12%, Outperforming Ether Amid Mixed Market Signals
Summary:
Binance Coin (BNB) experienced a 12% value increase in the week leading up to March 29, reducing the valuation gap with its main competitor, Ether (ETH). Despite an overextended rally suggested by mixed BNB Chain data, engagement with decentralized applications on the BNB Chain remains high. Connections between the crypto market's upward trend and inflows into Bitcoin exchange-traded funds are noted, along with a significant decrease in outflows from the Grayscale GBTC fund. The total value locked into BNB Chain's smart contracts indicates a decrease, but trading volume showed an 11% increase even as the coin grappled with the $620 level.
Over the week ending March 29, Binance Coin (BNB) saw its value increase by 12% reaching an almost fortnightly high of $620. This notable jump reduced the valuation difference with its primary competitor, Ether (ETH), which had a gain of 5% within the same period. However, varying signs from on-chain data of BNB Chain may imply an overextension of the rally. Market observers have noticed a correlation between the cryptocurrency market's upward trajectory and financial inflows into spot Bitcoin (BTC) exchange-traded funds (ETFs). However, for the first time since their launch in January, these funds experienced a net outflow of $890 million for the week ending March 23. Reassuringly though, there has been a significant reduction in outflows from the Grayscale GBTC fund. In the decade preceding March, BNB’s value skyrocketed by 61.7%, but this momentum backtracked after peaking at $645, equivalent to a market capitalisation of $96.4 billion. The total value locked (TVL) into BNB Chain's smart contracts, stood at $15.7 billion at the peak but has since dropped to a mere $7.1 billion, indicating a decrease of 55%. It's important to stress that the whole cryptocurrency market, especially decentralized finance (DeFi), has substantially minimized since late 2021. For instance, the total market data for all blockchains tracked by DefiLlama, once nearly $205 billion, currently stands at $155 billion, showing a drop of 25%. A closer look at BNB Chain's TVL in comparison with Ethereum and Solana (SOL) reveal a notable decline in smart contract deposits since March 2021, a 10% decrease over two months. By comparison, Ethereum and Solana saw an increase of 8% in their TVL and a leap of 29% respectively, as reported by DefiLlama. However, TVL alone should not be the measure of the success of a blockchain. Many decentralized applications, such as nonfungible token (NFT) markets, games, and social networks do not require substantial deposits. In the past week, almost 2 million active addresses were interacting with DApps on the BNB Chain. Despite Solana having 14% more active addresses, no blockchain except Ethereum comes close to matching BNB Chain's seven-day trading volume of $12.4 billion. In fact, while trading volumes for Solana and Ethereum declined, the trading volume for BNB Chain saw an 11% increase. Predicting future trends in the cryptocurrency sector is challenging. However, examining derivative metrics such as the demand for leverage in BNB perpetual futures contracts can provide an indication of market demand. The recent data shows a stability in the demand for leveraged long positions, with the 8-hour funding rate hovering around 0.03%, or approximately 0.6% weekly. Often, when traders are optimistic about the market, this rate can exceed 1.2% per week. Therefore, despite BNB's struggle with the $620 level, a positive market sentiment persists.
Published At
3/29/2024 10:10:00 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.