BNB (BNB), the native token of BNB Chain, surged 6% on Aug. 8, breaking above the $500 resistance level. However, on a weekly basis, BNB is still down 9% due to a significant correction earlier in August, driven by a reduced investor appetite for cryptocurrencies.
Despite this, BNB has outperformed most altcoins, being down only 1% over the past 30 days, while the overall altcoin market capitalization (excluding stablecoins) fell by 7% during the same period.
Improved macroeconomic perspectives fueled BNB price
Traders are now questioning whether BNB can reclaim its late-July high of $590 and how the changing sentiment has impacted the network’s health. According to Yahoo Finance, analysts believe that investor mood improved following better-than-expected US jobs data. This optimism was reflected in the S&P 500 index, which gained 1.9% on Aug. 8, and crude oil, which rose by 1.1%. Traders have become more risk-averse and confident in interest rate declines throughout 2024.
The US 5-year Treasury yield, which hit a low of 3.46% on Aug. 5, surged to 3.85% on Aug. 8, indicating that traders are demanding higher returns for fixed-income assets. This movement typically reflects distrust in the Federal Reserve's ability to control inflation without triggering a recession. As the central bank might be forced to cut interest rates and buy back bonds due to a weaker economy, this could create upward inflationary pressure while reducing capital costs, potentially boosting corporate earnings.
A significant part of BNB’s appeal comes from benefits on the Binance exchange, including discounted trading fees and access to exclusive launchpad offers. According to DefiLlama data, the $2.8 billion inflows between Aug. 5 and Aug. 7 reinforce its leadership in deposits and enhance trader sentiment, especially considering Binance’s former CEO and co-founder, Changpeng “CZ” Zhao, remains in jail.
To determine if traders are more confident in BNB after it reclaimed the $500 support, one should examine its derivatives metrics, particularly the leverage demand between longs (buyers) and shorts (sellers). Exchanges typically settle perpetual contracts every 8 hours, charging a fee from the side demanding more leverage. When traders are confident, longs pay 1.2% per month or even higher, whereas a negative funding rate indicates a bearish market.
Data shows BNB’s funding rate has been negligible over the past few days after a brief period in the red. While the absence of excessive leverage is positive, as it leaves room for bulls to increase their positions when necessary, the lack of enthusiasm after BNB’s 23% price gain in three days is somewhat concerning.
BNB Chain’s activity surges, but network deposits lagged its competitors
Beyond the derivatives markets, one should assess how BNB Chain stacks up against the competition regarding deposits and activity. Onchain metrics offer insight into whether real use cases support BNB’s valuation and the network’s appeal for new entrants and project launches.
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BNB Chain’s total value locked (TVL) reached BNB 8.8 million on Aug. 7, a 9% increase from two weeks prior. In comparison, Solana’s TVL grew by 21% in the same period in SOL terms, while Ethereum deposits increased by 14% in ETH terms. Avalanche experienced a 29% TVL growth in two weeks when measured in AVAX terms. Despite the nominal increase, BNB Chain’s decentralized application deposits lagged behind the competition.
Latest data from DappRadar indicates BNB Chain’s decentralized application volumes surged over the past 7 days, surpassing Ethereum’s 45% gains and Polygon’s 84% growth. In terms of active addresses (UAW) engaging with the networks’ Dapps, BNB Chain stood at 1.06 million over 7 days, while Ethereum saw a 1% decline and Solana had 29% fewer users.
Overall, the lack of demand for BNB futures leverage long and slower TVL growth relative to competitors cast doubt on the possibility of a bull run toward $590. However, its solid onchain activity justifies recent price gains, suggesting there is no reason for BNB to weaken below $500.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
