BNB's Impossible Pump

Sudden Surge. Binance founder CZ just started his 4-month prison sentence, but that hasn’t stopped the native token of his exchange’s closely affiliated BNB Chain from achieving its highest price ever! Why is BNB outperforming this week?

BNB has gained over 20% off Monday’s lows, breaking out above $700 for the first time in history. It has not given back a rally since shortly after Binance’s November settlement announcement with the Department of Justice (DOJ) for violations of the Bank Secrecy Act.

Although BNB is exhibiting outsized strength at the moment, it is not alone in the pump. This move up comes at the same time as many cryptos, stocks, and commodities have gained on investor optimism as major Western central banks commence their rate cut processes.

Many onchain BNB metrics have ticked steadily upwards this week, with daily transaction fees and DEX volumes seeing the greatest impacts from the surging speculative activity that has resulted from BNB’s gains; both metrics have more than doubled from Monday!

While the majority of blockchains – from Solana to Sei and Arbitrum to Optimism – have seen on-chain usage statistics slide lower this week, BNB Chain has been one of the few holdouts to experience increases in daily active addresses and transaction counts.

Unfortunately, these recent increases are merely blips from a longer-term time perspective, and every major onchain BNB metric remains well below its March 2024 local highs set after BTC obtained new all-time highs.

Indicating that this rally has largely been driven by speculation, open interest on BNB perpetual swaps has exploded by 50% during this week's move up to reach $1.05B, the highest level on record, suggesting that leverage traders (who will eventually need to close their positions) heavily contributed to the gains.

Should crypto prices continue to rise in the coming months as global central banks lower their interest rate targets, BNB likely ascends alongside, and is a prime candidate for outperformance among the majors.

BNB’s relative strength has increased by a respective 29% and 35% against BTC and ETH during 2024, and despite the fact that there is zero possibility this token receives a spot ETF at any time in the future like these two alternatives, its holders could be positioned for enhanced upside if recent performance holds.