2021 was a monumental year for the cryptocurrency sector. Bitcoin has gone through price points that seemed very impossible around 6 months ago, with cryptocurrency recording an all-time high of over $52,000 at the time of writing.
Given the current market sentiment and the buoyant momentum, it comes as no surprise that the altcoin market has also chosen to increase the price charts over the past week. Though Binance Coin may not be the oldest or the largest market cap among the altcoins on the market, BNB has seen tremendous growth in recent months.
At the time of writing, the coin was trading about $170, and if one compares the price to its value at the beginning of the year, the development is overwhelmingly apparent. BNB has risen by more than 327 per cent in less than two months. This rise has also led to concerns as to whether the coin is truly decoupled from the price fluctuations of large cryptos like Bitcoin and whether its bull run is reasonably independent.
Although there are signs of decoupling, the solution remains a little more nuanced. Although altcoins have always been connected to Bitcoin’s fate on charts, the recent past has shown that famous altcoins like Ethereum, Chainlink, etc. have been able to secure independent rallies at some points in time. Given the current business situation of BNB, it can be argued that the same is true of BNB.
However, there are caveats when you take a closer look at phenomena called decoupling. Despite the widespread increase in knowledge and acceptance of crypto, the market is highly speculative.
Bitcoin is a decade old, but it is still mainly an investment tool that operates in a speculative environment. In such a scenario, as long as the crypto market is dictated by FOMO and FUD, along with external stimuli such as common endorsements, etc., the altcoin market ends up not being very independent. Bitcoin’s feeling eventually makes or breaks all of the altcoins.
The situation they find themselves in for cryptos like Binance Coin is very fascinating. As an exchange token, BNB’s fundamental goal is to offer incentives for users who use BNB on Binance – a scheme similar to frequent flyer miles or points offered to users of a particular airline. However, exchange tokens like BNB are now acting as equity, increasing their price and increasing their value over time.
Despite these technological and functional gaps, BNB held rallies on its own. According to data given by CoinMetrics, the relationship between BNB and coins such as Bitcoin has dropped significantly over the past year from 0.84 to about 0.46 at the time of writing.
In addition, the fact that large addresses continue to accumulate BNB is a good indicator of the price of the coin. According to the data provided by Santiment, considering its high valuation, whales continue to support the cryptocurrency. This can be seen as an indication that many big addresses continue to expect even more price discovery from BNB, without falling victim to massive price corrections.
The data also showed that there were just 26 BNB addresses with over 100k tokens 6 months ago, compared to about 47 at the time of writing. In addition, network data has also shown that active addresses are on the rise along with their inactive tokens currently in motion.
Although it is difficult to assess to what extent BNB’s decoupling has taken place with regard to Bitcoin, it can be argued that the variables listed above add up to an extremely bullish Binance Coin scenario. And as has been shown in the recent past, going forwards, BNB might not be looking to Bitcoin to set off its bull run.
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