BNB Chain cools off after 24% surge, but strong fundamentals could back the next BNB rally
After an impressive 23.7% rally between Oct. 25 and Oct. 31, Binance Chain BNB, has faced a strong rejection from the $330 resistance. Is it possible that the two-day 6% sell-off from the $337.80 peak could indicate that further trouble is ahead?
Let’s take a look at what the data shows.
Analysts pinned the recent rally to the Oct. 28 news that Binance had invested $500 million in Twitter. However, the network's deposits and decentralized applications metrics have not accompanied the improvement in sentiment.
The strong upward movement was largely based on reports that Binance was preparing to assist Twitter in eradicating bots. The speculation emerged after billionaire Elon Musk raised the $44 billion required to complete his purchase of the social media platform.
In absolute terms, BNB's year-to-date performance reflects a 40% decline, but it ranks ahead of competitors as Ether (ETH) is down by 59%, Solana (SOL) 82% and Polygon (MATIC) registers a 79% correction.
To understand whether the recent 6% downturn is a presage of a deeper correction, traders should look at the network's use in terms of deposits and users.
Generally, analysts tend to give too much weight to the total value locked (TVL) metric. Although this might hold relevance for the decentralized finance (DeFi) industry, it is seldom required for crypto games, nonfungible token (NFT) marketplaces, gambling and social applications.
BNB Chain's primary decentralized applications (DApps) metric showed weakness in late July after its TVL dropped below 22.5 million BNB. More recently, the TVL dropped to 18 million BNB, nearing the lowest levels seen since April 2021.
In dollar terms, the current $5.9 billion TVL is the lowest figure since Aug. 11. This number
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