BNB, the native token of Binance’s BNB Chain, entered a symmetric triangle formation on August 10, as it faced a downtrend at the $335 resistance. The next five weeks were a struggle around $280, the exact intersection between the two conflicting ups and downs.
The decision on whether the symmetrical triangle will break up or down is expected on September 30, when the trend lines cross. Currently holding a total market capitalization of $45 billion, the BNB Chain token has outperformed the broader altcoin market by 15% over the past three months.
The latest breakthrough in BNB Chain development was announced on September 7, after the project introduced Zero-Knowledge (ZK) authentication privacy technology. A test network is expected for November, which means faster finalization and reduced transaction fees. Ethereum CEO Vitalik Buterin wants to implement a similar solution for the Ethereum network and highlighted the importance of ZK by the end of 2021.
The BNB Chain Ethereum-compatible network hosts fully functional, decentralized applications (DApps), including decentralized exchanges (DEXs), games, lending services, social networks, product aggregators, and NFT marketplaces.
Deposit depreciation can be a red flag.
Although currently at less than 60%, BNB is the third largest cryptocurrency by market capitalization excluding stablecoins. Moreover, the network holds a deposit of 6.6 billion dollars locked in smart contracts, this term is locked in the total value, in the industry.
While the value of BNB has increased by 26.5% over the past 3 months, the network’s TVL, measured in BNB tokens, has decreased by 12.5% over the same period. Usually this information is relevant, but it depends on what level other competitors have reached.
In fact low smart contract deposits were common in the industry. For example, Solana (SOL) TVL has decreased by 27.5% in 3 months, and Avalanche (AVAX) has decreased by 36%. Even Ethereum showed a 29% drop in ETH deposits on July 17th from 34 million to 24.2 million.
In dollar terms, BNB Chain’s $6.6 billion TVL gained 12% in the three months leading up to September 16. This figure is much higher than other Ethereum competitors, such as Avalanche’s $2.2 billion or Solana’s $1.3 billion, according to data from Defy Lama.
Gameta-driven DApp usage is on the rise.
Investors should analyze Decentralized App (DApp) usage metrics to ensure that BNB Chain TVL’s decline is accompanied by a decline in users. Some DApps, such as games and collectors, do not require large deposits, so the TVL measure is not relevant in those cases.
PancakeSwap, a BNB Chain decentralized exchange, has 1.75 million active addresses, and is the absolute leader on all smart contract networks. Meanwhile, the Ethereum network only holds three DApps with over 35,000 active addresses, namely Uniswap, OpeanSea and MetaMask Swap.
Most importantly, three DApps using BNB Chain grew by 190% or more, with Gameta being the most promising, with over 900,000 active addresses. Critics of BNB Chain will be upset if it consolidates its leadership over all modern contract networks in addition to Pancake Swap.
Judging by the absolute numbers, the 12.5% TVL reduction of BNB tokens and the 14% reduction in active addresses on Binance Chain’s leading DApp, one could wrongly conclude that the BNB token is destined for a correction.
However, a more qualitative analysis, including comparisons with competitors, shows that a breakout of the symmetrical triangle pattern at $280 on September 30 could be a major trigger for BNB’s price.
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