There are several obstacles Binance Coin or BNB must overcome. One is rival blockchains, a slowdown in daily transactions, and a stagnant TVL. But statistics suggest Binance Coin is still a contender.
A 1,760 percent increase in the value of BNB between January and May 2021 following a 69% correction.
As of November, BNB’s market value peaked at $3 trillion. They still did not break BNB’s all-time high despite the overall cryptocurrency market capitalization reaching $3 trillion.
For various reasons, investors in BNB doubt the current $465 price, which is 33% below the all-time high. Because traders were previously paying up to 3% a week to keep futures’ short bets open, betting on the negative,
Traders Became Bearish
Perpetual futures prices, as opposed to monthly contract prices, are relatively similar to spot exchange prices. As a result, ordinary traders no longer have to compute the futures premium or manually roll over contracts near expiration.
Longs (buyers) charge a funding rate when they request greater leverage, making this sorcery possible. Over-leverage in the short position causes the funding rate to go negative, and shorts (sellers) pay the fee.
Binance Overpriced
The enormous premium over other smart-contract chains could be the explanation for the Binance short. Solana (SOL) has a market value of $43.3 billion, but BNB’s $78.2 billion is 80% larger. In addition, the premium is 188% more than Terra’s (LUNA) $28.2 billion and 2750% higher than Avalanche’s (AVAX) $20.8 billion. The total value locked (TVL) of Binance Smart Chain, which is now $15 billion, could also be an issue.
In three months, Terra’s TVL jumped from $9 billion to $19 billion. At the same time, Avalanche’s TVL jumped from $6.5 billion to $11.6 billion. PancakeSwap is the only decentralized exchange where the competition went over Binance Chain’s apps.
A network activity analysis is a requirement to determine if Binance Smart Chain usage peaked accurately. A small TVL on smart contracts is sufficient for dApps, such as games, social networks, and NFT marketplaces.
Binance Chain’s major competitor, ETH, is now battling transaction costs of $40 or more. This presents an ideal opportunity for competing chains.
To their credit, Binance Smart Chain stagnated in daily transactions and TVL, indicating adoption and growth.
Binance’s dominance in derivatives may call into doubt
Because Coinbase acquired FairX, which will allow future trading offers, Binance’s position in the market may threaten.
More than that, on October 25th, the FTX exchange raised $1.32 billion in private investment. FTX US completed its acquisition of cryptocurrency options exchange LedgerX. As a result, it is more confident that it will offer derivative contracts to investors in the United States.
Due to Binance’s first-mover advantage stands a high probability of maintaining its position as the market leader. A $1 billion development fund for the Binance Smart Chain ecosystem starts on October 12th.
Bitcoin’s third-largest currency has good foundations, regardless of whether it overvalues or not. Despite the current price performance, there are still many opportunities for growth in the future.
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