BNB Chain, the blockchain network tied to Binance’s native token, BNB, is facing mounting concerns as decentralized exchange (DEX) volumes on the platform dropped by 24% in just one week. The decline raises questions about the network’s stability and the potential for further price drops in BNB, even as some investors anticipate a rally following the expected release of Binance co-founder Changpeng “CZ” Zhao from detention in the United States.
BNB’s Price Struggles Amid Declining Activity
Between August 23 and September 2, BNB’s price fell sharply by 16.1%, dropping from $598.80 to $502.10. Although buying interest emerged at levels below $510, helping BNB recover slightly to $517, the token has struggled to maintain momentum. This decline has sparked fears that BNB may be entering a bearish market, especially since it hasn’t held above $610 since mid-June.
The decreasing activity on BNB Chain, particularly in DEX volumes, is contributing to sell pressure. Some traders are worried that the token could retest the $400 level, which it last saw on August 5.
The Impact of CZ’s Anticipated Release
Some market participants speculate that BNB could break out of its current consolidation pattern once CZ is released from detention. While there’s no direct correlation between CZ and BNB’s price, his influence and the market’s anticipation of his release could impact investor sentiment. An anonymous altcoin trader, Degen.eth, predicted that BNB might see a price surge if CZ is freed after serving four months in detention for pleading guilty to money laundering charges.
However, this optimism comes with risks. Traders might buy BNB in anticipation of CZ’s release and then sell to take profits as the date approaches, which could lead to increased volatility. Given the recent weakness in BNB Chain activity, betting on a rally solely based on CZ’s release could be precarious.
BNB Chain’s Worsening Fundamentals
Despite BNB remaining the third-largest cryptocurrency by market capitalization, excluding stablecoins, recent data suggests a decline in network fundamentals. BNB Chain’s total value locked (TVL) has dropped to its lowest level since February 2021, indicating that investors might be seeking better opportunities elsewhere. As of August 20, total deposits in BNB Chain’s smart contracts fell to 7.5 million BNB, a 14% decrease over three months. Leading decentralized applications (DApps) like PancakeSwap and PinkSale also saw significant declines in TVL.
Comparatively, Ethereum and Solana networks have shown stronger performance during the same period. Ethereum’s TVL increased by 7% in Ether terms, while Solana’s deposits rose by 28% in SOL terms. This disparity suggests that the issues driving investors away from BNB Chain are specific to the network itself.
Declining DEX Activity on BNB Chain
DefiLlama data highlights a concerning trend: BNB Chain’s DEX volumes declined by 24% in the week leading up to September 2, significantly underperforming Ethereum, which saw only a 4% drop. Furthermore, DappRadar reported an 18% decrease in active addresses engaging with BNB Chain smart contracts, compared to a 5% decline on Ethereum.
All top five BNB Chain DApps—Move Stake, Treasure Ship Game, PancakeSwap, StarryNift, and Galxe—experienced sharp declines in active users over the same period, indicating that the downturn is affecting a broad range of applications on the network.
The recent downturn in BNB’s price and network activity raises concerns about the token’s future performance. While some investors remain hopeful that CZ’s release could trigger a rally, the underlying fundamentals suggest caution. The significant decline in DEX volumes and TVL on BNB Chain points to broader issues that could continue to weigh on BNB’s price.
