Bankless: Why did BNB hit a record high?

Author: Jack Inabinet, Bankless; Compiler: Tao Zhu, Golden Finance

Sudden surge. Binance founder CZ has just started serving a four-month prison sentence, but that hasn't stopped the native token of BNB Chain, the exchange closely associated with him, from hitting an all-time high! Why has BNB outperformed this week?

BNB has risen more than 20% from Monday's lows, breaking through $700 for the first time in history.It hasn't fallen back since shortly after Binance announced a settlement with the Department of Justice (DOJ) in November for violating the Bank Secrecy Act.

Despite BNB's current outsize strength, it's not the only cryptocurrency to rise.As major Western central banks begin to cut interest rates, many cryptocurrencies, stocks, and commodities have risen on investor optimism.

Many on-chain BNB metrics have been steadily rising this week, with daily transaction fees and DEX trading volume being the most impacted by the surge in speculation caused by BNB's rise; both metrics have more than doubled from Monday!

While most blockchains (from Solana to Sei, from Arbitrum to Optimism) have seen a decline in on-chain usage statistics this week, BNB Chain is one of the few blockchains that has seen an increase in both daily active addresses and transactions.

Unfortunately, these recent gains are short-lived in the long term, with every major on-chain BNB metric well below the March 2024 local highs set after BTC hit its all-time high.

Suggesting that the rally was largely driven by speculation, BNB perpetual swap contracts surged 50% during this week's rally to $1.05 billion, the highest level on record, suggesting that leveraged traders (who will eventually need to close their positions) contributed significantly to the gains.

As cryptocurrency prices continue to rise in the coming months as global central banks cut interest rates, BNB may also rise and become one of the outperformers among major cryptocurrencies.

In 2024, BNB's relative price relative to BTC and ETH increased by 29% and 35%, respectively. Although this BNB is unlikely to receive a spot ETF like these two cryptocurrencies at any time in the future, its holders may get more upside if the recent performance remains the same.