BNB rallies to $600 and traders call for higher — Does data support this view?

BNB (BNB), the native token of BNB Chain, surged to $614 on Sept. 27, marking a 25.7% gain 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.

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 release is driving the rally. Nevertheless, some technical analysts suggest that the recent resilience of BNB, which avoided dropping below $500, signals 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, paying a $150 million penalty and agreeing to permanently step down from exchange management. He was sentenced to four months in jail. In November 2023, Binance reached a $4.3 billion settlement with US regulators. CZ acknowledged Binance’s mistakes but emphasized that no user funds had been misappropriated.

CZ’s release is probably not driving BNB price

Although CZ’s legal issues may have attracted attention, they are likely unrelated to BNB’s recent price action, beyond 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 assess whether BNB can reclaim its all-time 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 rally requires a comparison of BNB Chain’s performance against rival blockchains like 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 over 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 surged 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 timeframe. Similarly, Avalanche’s DApp volume dropped by 24%, totaling $1 billion in the 30 days leading up to Sept. 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 appears consistent with the broader cryptocurrency market. However, not all DApps require large transaction volumes or deposits to be successful. Sectors like non-fungible token (NFT) marketplaces, collectibles, mini-games, social networks, prediction platforms, and other web3 services often prioritize user engagement over transaction volume. Thus, 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% over the past 30 days, reaching 2.47 million, according to DappRadar. In contrast, the Ethereum network saw a 23% decline 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. Additionally, there is no evidence to suggest that the release of CZ from U.S. custody is fueling a price surge. As a result, there is little basis to expect BNB to reclaim its all-time high in the near term.