BNB Surges Past $700 Amid Modest Leverage Demand, But Rally Sustainability Questioned

BNB Chain activity and BNB derivatives point to a robust bull run, yet there seems to be limited potential for further upside.

Source: ambcrypto.com

On June 6, BNB, the native token of the BNB Chain, hit an all-time high of $723 before correcting to $705. Despite this dip, BNB has surged by an impressive 19% in the initial six days of June, outperforming the total crypto market's 4.2% gain during the same timeframe. Traders are now scrutinizing the sustainability of this rally and seeking indicators that could fuel additional bullish momentum for BNB's price.

BNB Futures Open Interest Has Surged Beyond $1 Billion

Analysts suggesting that the BNB rally was fueled by excessive leverage from buyers using derivatives may be mistaken. Despite BNB futures open interest breaking above $1 billion for the first time on June 6, this data alone doesn't reveal whether more leverage is being demanded from buyers or sellers. Derivatives contracts require both a buyer and a seller of equal size and price.

To gauge traders' appetite, it's crucial to analyze perpetual futures, or inverse swaps, which adjust their rates every eight hours to balance leverage demand. A low funding rate, such as the one below 0.03% seen over the past six days for BNB, indicates a modest preference for leverage among buyers. This rate, equivalent to 0.6% per week, isn't considered expensive by most traders. Comparatively, BNB's 0.2% weekly funding rate aligns with BTC and is lower than SOL, which currently stands at 0.5%. Thus, there's no clear evidence that excessive leverage through BNB futures drove the recent rally above $710.

BNB Chain’s Activity Demonstrates Resilience, but Not Enough to Justify Further Price Gains

In terms of DApps activity, BNB Chain remains a top 3 contender by volume, while its direct competitor, Solana, is far from the leaderboard. Initial analysis of DApps activity strongly favors BNB, with data from the past seven days showing a 23% surge in volumes, while nearly every other competing blockchain experienced a contraction. However, the relatively stable number of active addresses engaging with BNB Chain’s DApps raises questions about the actual growth in user numbers. Additionally, BNB Chain’s $6 billion seven-day volume is 85% lower than Ethereum’s $40.5 billion activity during the same period.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.