BNB price rallied by more than 20% in the last 24 hours due to several key reasons.
The price of Binance Coin (BNB), the native cryptocurrency of Binance and Binance Smart Chain, rallied by more than 20% in the last 24 hours.
The swift recovery comes after a market-wide correction on April 18, during which major cryptocurrencies including Bitcoin (BTC) and Ether (ETH) saw a sharp decline.
ETH price, for instance, declined from $2,400 to as low as $1,900 in a sudden pullback as Bitcoin plunged below the $60,000 support level to as low as $52,000.
Overheated futures market gets a reset
The market saw a steep pullback in a short period because the futures market was extremely overheated.
Over $10 billion worth of cryptocurrency positions were liquidated on a single day, with Bitcoin accounting for over $5 billion of it.
Since the drop was more technical than fundamental, and it was a cascade of liquidations that caused the pullback, the market pared most of the losses relatively quickly
It was also evident that the futures market led the correction because the price of major cryptocurrencies was trading lower in the futures market than the spot market.
Adam Cochran, a partner at Cinneanhaim Ventures, explained:
He added that the liquidation of a $63 million position shocked the market, which put even the major cryptocurrencies at risk of a speedy drop.
BNB fundamentals remain strong
After the initial futures market-driven drop, cryptocurrencies with strong fundamentals began to recover first.
While Bitcoin and Ether rebounded relatively quickly by 12% and 15% from their respective lows , BNB outperformed both BTC and ETH within the past 24 hours in its recovery.
The strong performance of BNB stems from two positive catalysts: the record $600 million BNB burn by Binance and the uptrend of Binance Smart Chain metrics.
On April 16, Cointelegraph reported that Binance burned $600 million worth of BNB in the first quarter of 2021, which reduces the circulating supply and suggests the exchange generated at least $750 million in quarterly profit.
Moreover, Binance CEO Changpeng Zhao emphasized yesterday that the Binance team has no plans to sell their BNB holdings, 40% of the total supply, in a likely dig at Coinbase insiders reportedly selling $5 billion worth of COIN shares last week.
Hence, when the market started to recover, BNB saw a stronger rally possibly as a result of a delayed response to the $600 million burn.
Atop the token burn, the daily number of transactions on Binance Smart Chain surpassed 5 million.
Since BNB is also the native token of the Binance Smart Chain blockchain network, rising user activity positively affects the value of BNB, contributing to its recovery.
Traders were ready to buy the dip
A pseudonymous trader known as “Altcoin Psycho” stated that traders were ready to buy the dip in the altcoin market.
The quick inflow of capital into the altcoin market shortly after the dip led many altcoins to recover swiftly, which likely catalyzed BNB’s upsurge.