Since breaking above $540 billion at the beginning of the year, the Bitcoin market has attracted a further $530 billion in capital – almost doubling in value just this year alone. The gains mean the price of each Bitcoin is now up by 83.6% in the past 30 days and almost 500% over the past 12 months. Naturally, many alt coins have also enjoyed spectacular gains but few so much as Binance Coin (BNB), which has exploded by over 100% in the past week and an incredible 627% over the past 30 days.
BNB coin celebrated the 2021 new year at a meager $38, a fraction of its recent all-time high (ATH) of $340. The vast majority of those gains have been made this month, growing from only $44 on February 1st.
So what’s driven this insane rally that has eclipsed most other alt coins?
As most people already know, Binance is the world’s largest cryptocurrency exchange – by a long way! According to the leading crypto metrics site CoinMarketCap, Binance processes over three times the volume of the second-largest exchange, Huobi Global. Approximately $36 billion flows through Binance in a 24 hour period, compared to only $11 billion for Huobi.
Binance Coin (BNB) was introduced a few years ago to give users a cheaper way to trade between coins on the platform. With BNB, users can pay cheaper trading fees, participate in token sales hosted on Binance Launchpad, and, most importantly – interact with the Binance DEX, a decentralized exchange built on the Binance Smart Chain.
The power of DeFi
This is where analysts believe BNB’s sudden price rally stems from – a migration of funds within the growing decentralized finance (DeFi) space. Recently, several big DeFi projects built on the Binance Smart Chain have begun attracting attention, including the decentralized exchange PancakeSwap.
PancakeSwap recently overtook the long-time leading decentralized exchange Uniswap, which is built on the Ethereum blockchain. Over the past few weeks, exceedingly high Ethereum ‘gas’ fees have caused many users to criticize the platform. This has led many Defi users to shift their interest to PancakeSwap, which attracts considerably lower fees, paid using BNB.
Ethereum gas fees are up by almost 10 times this year, from an average of $2 to $20. The interest in PancakeSwap has driven a similar price change, with the CAKE token increasing from around $2 in early February to an all-time high (ATH) above $20.