Surge in BNB Chain activity backs 11% rally, but can BNB push above $300?

Binance Coin, the native token of BSC Chain (BNB) took a different direction from the wider cryptocurrency market on Dec. 26 by surging 11% to reach its highest level in six months. Although BNB initially struggled to break the $300 resistance, the rally successfully closed the market capitalization gap opened by Solana (SOL).

*BNB token/USD Tether price index, 4-hour. Source: TradingView & Cointelegraph*

Before Dec. 23, BNB held the position of the third-largest cryptocurrency (excluding stablecoins). However, SOL’s impressive 50% gains over seven days changed that. The question now is whether BNB can maintain a market cap exceeding $46 billion to regain its third spot. Both BSC Chain and Solana, despite their decentralization merits, offer fast and cost-effective blockchains that don’t exclusively rely on layer-2 scaling solutions.

A significant portion of BNB token’s value comes from reduced trading fees and exclusive launchpad offers and services from Binance. Investors initially feared that the exchange would lose market share swiftly after its founder, Changpeng ‘CZ’ Zhao, pleaded guilty to U.S. Federal charges on November 21. However, this was not the case, at least until the trial concludes and Binance is required to report all trades to a watchdog designated by the Justice Department. Furthermore, Binance’s recent engagement with the U.S. Commodity Futures Trading Commission (CFTC) on Dec. 18 further decreased the risk of regulatory shutdown.

Nonetheless, BNB faces selling pressure due to the significant concentration of ownership among Binance’s founders and team. The lack of transparency regarding the initial distribution of BNB tokens eroded investor trust, especially after the exchange altered its token burn mechanism over the years. In essence, the initial commitment to buybacks using proceeds from Binance’s exchange was replaced by a simple burn mechanism.

Uptick in DApp transactions and volume backs BNB price move

Various valuation models for the BNB token can be created, but none can accurately explain how most market participants assess its benefits and risks. Nevertheless, it is worthwhile to compare

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Author: Marcel Pechman

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