Market News
Crypto Rollercoaster: Binance’s Bullish Bounce and Solana’s Steep Slide in Bearish Blitz
The crypto market continues to lose ground, with Bitcoin falling under $26,200 and Ethereum below $1,750 this week.
The low liquidity in the market seems to be driving the prices lower. Market depth or liquidity has been worsening even on major exchanges like Binance while two of the biggest institutional liquidity providers, Jane Street and Jump Crypto, dialed back their crypto-trading businesses in the US. This move from the market makers came amidst the country's regulators' continuing their crackdown on the industry. As such, with order books thinner, it now takes less capital to move an asset's price.
An absence of liquidity, which has been failing to recover since the collapse of FTX, combined with the highly-leveraged nature of the crypto market, can cause a significant increase in volatility. Additionally, if the US equities market takes a dump, then the collapsing market can see an acceleration on the downside.
These latest losses have the total cryptocurrency market cap down by 3.% in the past 24 hours at $1.14 trillion, according to CoinGecko.
While the combined market capitalization of all the coins in the crypto industry is up from the $820 billion low hit in Nov. 2022 as a result of the FTX collapse, it is still far off from the all-time high (ATH) a year prior to that when it surpassed $3 trillion.
This is because the majority of altcoins are down 80% to 90% from their peaks. And when it comes to majors, Bitcoin and Ether are down about 62% and 64% from their respective ATHs.
But among the top 20 crypto assets, there is one coin that has managed to do better than even BTC and ETH in sustaining its gains, while others have been hit far more brutally. So, let's take a look at them!
Binance Coin (BNB)
When it comes to the asset with the least percentage of downside from its ATH, BNB is the clear winner. The 4th largest cryptocurrency with a market cap of $47.7 billion has only lost about 56% of its value since its ATH of $686 hit on May 10, 2021.
BNB is currently up 24.5% in 2023 so far and 32.3% in the past year while being down 7% in the past week. As of writing, BNB has been exchanging hands at $304.
Lately, BNB has been seeing some fresh accumulation among large institutional investors. While a group of whales with balances of 100,000 to one million BNB stopped selling, they added 90,000 BNB coins into their wallet balances.
BNB is the native token of the largest cryptocurrency exchange Binance, which was founded by Changpeng Zhao, also known as “CZ,” in 2017. BNB holders get access to discounted fees on the platform. As such, demand for the token is linked to the exchange's usage and activity. This is why buying BNB can be seen as a bet on the exchange's success.
In April, the spot trading volume of Binance plummeted by 48%, marking the second consecutive month of declines and recording its second-lowest monthly trading volume since 2021, as per CCData's latest Exchange Review report.
In addition, Binance's market share kept on sliding, falling for the second consecutive month to 46.3%, its lowest since October 2022, prior to FTX's collapse. Despite this, Binance is still dominating the industry with a huge lead over its competitors.
BNB was actually created to raise capital through an ICO in 2017, during which Binance sold 100 million BNB at a price of 2,700 BNB for 1 ETH. As per its original whitepaper, Binance proposed spending 20% of its profits every quarter buying and burning BNB, essentially removing coins from circulation, until the volume was brought down to 100 million. As of May 2023, the volume in circulation is around 157 million BNB, according to CoinGecko.
Originally, BNB was launched on the Ethereum blockchain but later migrated to its own blockchain called BNB Chain, which was launched in April 2019. The old tokens were destroyed and created on the new chain in equivalent numbers during this migration.
BNB Chain is a layer 1 network that allows other applications to be built on top of it. It offers a faster and cheaper alternative to Ethereum, but it is more centralized. BNB token is also used to pay transaction fees on the blockchain. Besides its primary centralized exchange, Binance also has a decentralized exchange (DEX) on the BNB Chain.
BNB Chain uses a proof-of-stake authority (PoSA) consensus mechanism under which it has a small number of the largest stakers as validators.
BNB's gains in 2021 were the result of the growing popularity and a thriving ecosystem of decentralized applications (dApps), including DeFi and NFT on BSC.
At the time, the total value locked (TVL) in BSC went to almost $22 billion, as per DeFi Llama. This activity has since slowed down tremendously, with TVL currently standing at $4.51 billion — the third largest after Ethereum ($26.54 bln) and Tron ($5.31 bln).
According to recent on-chain indicators, the BNB Chain has also been gaining market share. Over the past week, the number of Daily Active Users (DAU) on the network increased by 27%, from 4,068 to 5,148. DAU metric measures the number of unique wallet addresses interacting on a blockchain.
Besides being a utility token, BNB also acts as a governance token for the BNB chain, allowing holders to participate in some of the project's decision-making. It is further in demand for staking on the BNB Chain.
Click here to learn all about investing in Binance Coin (BNB).
Solana (SOL)
Once a coveted cryptocurrency and one of the top-performing assets of the 2021 crypto bull run, SOL has suffered the most among the top 20 crypto assets, even worse than meme coins. The 10th largest cryptocurrency, with a market cap of $7.96 billion, is currently trading at $20.18, having lost just over 92% of its value since its ATH of almost $260 on Nov. 6, 2021.
However, SOL is performing well in 2023 with gains of 102% YTD, the highest among the top 30 coins. Meanwhile, the cryptocurrency is down 7.7% in the past week and 54.3% in the past year.
SOL is the native token of the Solana blockchain, which was founded by software engineer Anatoly Yakovenko in 2017. Those who invested in the project include Multicoin Capital, BlockTower Capital, Distributed Global, NEO Global Capital, Foundation Capital, Blockchange Ventures, Slow Ventures, Rockaway Ventures, and Passport Capital.
Launched in March 2020, Solana is a layer 1 platform that has fast transaction times and inexpensive fees. The token is used to pay transaction fees as well as to run smart contracts on the network.
It is an inflationary cryptocurrency with no hard cap on the total number of tokens. As of May 2023, about 395 million SOL tokens are in circulation. SOL has a starting annual inflation rate of 8%, which decreases by 15% every year until it reaches 1.5%, which will be the fixed long-term rate.
Solana is secured through the popular proof-of-stake (PoS) consensus mechanism, where validators are tasked with ensuring transactions are valid. To become a validator and help secure the network, people can stake “some of their SOL. And in exchange for locking their tokens up, holders earn rewards. Validators are chosen based on how many SOL tokens they own.
In addition to PoS, Solana also uses proof-of-history, which is its core advancement and aims to speed up the process of ordering transactions in a blockchain. This mechanism is used to prove that an event has happened at a particular time.
A competitor to Ethereum, Solana also offers a way to build dApps and currently has $263 million in TVL. This value has fallen considerably since it peaked at just above $10 bln in late 2021 but jumped 23.5% Quarter over Quarter (QoQ) this year.
The blockchain, which is known for offering users fast, secure, and scalable infrastructure for DeFi and NFT, experienced substantial growth in Q1 of 2023. When it comes to the NFT sector of the ecosystem, daily new NFTs on Solana surged from 2.6 Million to 2.9 Million QoQ, and NFT sales volume in the secondary market denominated in USD increased by almost 36%. Moreover, the network saw 96,000 unique active programs in 1Q23 compared to 58,000 in 1Q22.
Meanwhile, the overall earnings of Solana declined by 17.9% in the last 30 days, according to the token terminal. The number of code commits, however, continued to increase on GitHub. This growth comes after turbulent times during which the blockchain saw a large number of downtimes and various prominent NFTs migrating to other protocols.
While Solana has seen the most amount of losses during the last two years of the bear market, some coins like Dogecoin (DOGE), Polkadot (DOT), and Shiba Inu (SHIB) are not far behind with losses of 90.4%, 90.3%, and 90% respectively.
