Here’s why Binance Chain (BNB) will face an important price test on September 30
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BNB, the original token of Binance’s BNB chain, entered a symmetric triangle on August 10 when it first encountered a bearish trend line at the $335 resistance. The next five weeks have been a struggle around $280, at the exact intersection of two conflicting bullish and bearish patterns.
A decision on whether the symmetrical triangle will break upwards or downwards is expected by September 30, when the trend lines cross. With a current market cap of $45 billion, the BNB Chain token has outperformed the broader altcoin market by 15% over the past three months.
The latest breakthrough in the development of the BNB chain was announced on September 7, after the project introduced zero-knowledge (ZK) secure scaling technology. The testnet is expected to be completed in November. The goal is faster completion and a lower transaction fee. Ethereum head Vitalik Buterin also wants to implement a similar solution for the Ethereum network and emphasized the importance of ZK at the end of 2021.
The BNB chain’s Ethereum-enabled network is fully functional and hosts decentralized applications (DApps), including decentralized exchanges (DEX), games, collateralized lending services, social networks, revenue aggregators, and NFT marketplaces.
A drop in price deposits can be a red flag
Despite currently being 60% below its all-time high, BNB remains the third largest cryptocurrency by market cap, excluding stablecoins. In addition, there are $6.6 billion worth of deposits on the network locked into smart contracts. This term is known in the industry as total value locked.
Despite the 26.5% increase in BNB price over the past 3 months, the network’s TVL measured in BNB tokens decreased by 12.5% over the same period. In general, this information is worrying, but it depends on how other competitors have fared.
In fact, smaller smart contract deposits have been the norm across the industry. For example, Solana’s (SOL) TVL fell by 27.5% in 3 months and Avalanche’s (AVAX) by 36%. Even Ethereum’s ETH deposits fell 29 percent to 24.2 million from 34 million in July.
In dollar terms, BNB Chain’s current TVL of $6.6 billion rose 12% in the three months leading up to September 16. This number is significantly better than other Ethereum competitors such as Avalanche’s $2.2 billion or Solana’s $1.3 billion DeFi Llama, according to data.
The use of DApps is growing under Gameta’s leadership
To verify whether the decrease in BNB Chain’s TVL is related to a decrease in users, investors should analyze decentralized application (DApp) usage metrics. Some DApps, such as games and collectibles, do not require large deposits, so the TVL meter is irrelevant in these cases.
PancakeSwap, the decentralized hub of the BNB chain with 1.75 million active addresses, is the undisputed leader in all smart contract networks. Meanwhile, there are only three DApps on the Ethereum network with over 35,000 active addresses, namely Uniswap, OpenSea and MetaMask Swap.
More importantly, three DApps using the BNB chain grew by 190% or more, with Gameta being the most promising with over 900,000 active addresses. It will be difficult for the critics of the BNB chain if, in addition to PancakeSwap, another application strengthens its leadership position in all smart contract networks.
Judging by the absolute numbers, which means a 12.5% decrease in TVL in BNB tokens and a 14% decrease in active addresses on Binance Chain’s leading DApp, one could mistakenly conclude that the BNB token is ready for a correction.
However, a closer analysis, including a comparison with competitors, shows that a symmetrical triangle pattern above $280 on September 30 is likely to be bullish for BNB price.
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