BNB Faces Headwinds Amidst CZ’s Detention and Waning Chain Activity

BNB, the native token of Binance Chain, has experienced a significant decline in recent weeks, raising concerns among investors about a potential bearish market. The token’s price plummeted by 16.1% between Aug. 23 and Sept. 2, falling from a high of $598.80 to a low of $502.10.

CZ’s Detention and Market Sentiment

One of the primary factors influencing BNB’s price is the ongoing detention of Changpeng “CZ” Zhao, the co-founder and former CEO of Binance, in the United States. While there is no direct link between CZ’s situation and BNB’s price, his strong personality and the anticipation surrounding his release could potentially impact the market.

An anonymous altcoin trader, Degen.eth, has predicted a surge in BNB’s price once CZ is freed from detention. The trader believes that the “insane green candle” will be fueled by the excitement surrounding CZ’s return and the potential for renewed growth in the Binance ecosystem. However, it’s important to note that traders may attempt to front-run this event, buying BNB ahead of CZ’s release and taking profits as the date approaches. This could lead to a more muted price reaction than anticipated.

Declining Activity on BNB Chain

In addition to CZ’s detention, declining activity on BNB Chain is also contributing to the downward pressure on BNB’s price. Metrics indicate a decrease in interest, particularly in decentralized exchange (DEX) volumes. This has led traders to question whether the $400 level from Aug. 5 could be retested.

BNB Chain’s total value locked (TVL) has recently dropped to its lowest level since February 2021, suggesting that investors are finding better opportunities elsewhere. This decline is evident in the decreased deposits in BNB Chain’s smart contracts, with notable decreases in leading DEXs like PancakeSwap and decentralized launchpads like PinkSale.

Losing Ground in DEX Activity

DefiLlama data shows that BNB Chain’s DEX volumes have declined by 24% in the seven days leading up to Sept. 2, significantly underperforming Ethereum. Similarly, the number of active addresses engaging with BNB Chain smart contracts has decreased by 18% over the same period.

This decline in DEX activity and the decrease in active users on BNB Chain’s top DApps indicate that the downturn has affected various sectors of the ecosystem, including games, staking services, DEXs, and Web3 applications.

BNB/USD Technical Analysis

From a technical perspective, BNB has been trading within a large range between $460 and $635 for several weeks. The recent decline has pushed the price below the moving averages, suggesting that the market is currently in a bearish trend. However, there is still support at the $460 to $495 level, which could prevent a further significant drop.