BNB, the native token of the BNB Chain, has exponentially risen to an all-time high of $723 on June 6, reverting to $705 after a slight dip. This meteoric rally results in a staggering 19% gain in the first week of June, eclipsing the average 4.2% gain recorded across the overall cryptocurrency market during the same timeline. This has prompted traders to investigate the viability of this rally and the possible triggers for further upward price volatility.
The noteworthy surge in BNB’s price happens amidst the news of Binance exchange’s founder and former CEO, Changpeng Zhao, commencing his imprisonment in a California federal prison on June 1, related to money laundering charges. Despite the setback, the absence of Zhao’s participation in Binance’s future plans does not seem to have any negative influence.
BNB’s current market capitalization stands at a whopping $108 billion and commands a 37% upper hand over its competitor Solana valued at $79 billion. Part of BNB’s valuation is attributed to the discounts given on Binance services and access to exclusive offers such as Binance Launchpad. However, comparing BNB Chain’s activity to that of Ethereum, the market leader in decentralized applications (DApps), could offer insight into whether BNB’s price momentum above $710 is feasible.
Analysts postulate that the BNB rally may be catalyzed by leveraged buying from derivative traders, further endorsed by FOMO traders. This theory stems from the observation that BNB futures open interest exceeded $1 billion for the first time on June 6. However, the data contradicts these assumptions, stating that the 18% rally wasn’t wholly owed to derivatives markets. To derive real trader intentions, perpetual futures, otherwise known as inverse swaps, should be analyzed.
In conclusion, while the BNB Chain’s activity exhibits strength, it seems unlikely to substantiate additional price growths based on the current data and market trends.