‘L1 Wealth Effect’ Drives BNB Ecosystem Despite Pullback From $1.3K High

The native token of the BNB Chain, BNB, is down more than 2.5% in the last 24 hours, continuing its slide from a new all-time high above $1,300 registered earlier this week.

BNB rose 129% over the past year, outpacing both bitcoin and ether, as renewed momentum in the BNB Chain ecosystem kicked off a new wave of capital rotation.

Trading volatility remains high, with the token swinging within a $62 range from Oct. 9–10 before closing at $1,250, according to CoinDesk Research’s technical analysis model.

Jack O’Holleran, CEO of SKALE Labs, told CoinDesk the recent surge appears to be driven by Binance’s scale and user reach rather than hype.

“We’re in a phase of the cycle that’s focused on reach over tech,” he said. “Distribution is the key factor driving growth right now. That reach advantage is translating directly into adoption, with $14.8 billion in inflows last quarter and BNB Chain activity surging.”

Jasper De Maere, a strategist at Wintermute, compared the current rally to Solana’s late-2024 cycle in a statement to CoinDesk, where price gains in a layer-1’s base token triggered a wave of liquidity across the ecosystem.

“BNB’s rally, fueled by gas-fee cuts, RWA incentives, and liquidity programs, ignited a wave of on-chain activity as capital rotated into yield and meme sectors, CAKE, HENA, HONEY, and MANTA among the main beneficiaries,” he wrote.

The pattern follows what De Maere calls the “L1 wealth effect,” when rising token prices drive USD gains that are reinvested into surrounding protocols.

“As long as BNB prices hold near highs and bridged capital doesn’t leave, recycling will continue, liquidity will simply rotate between sectors (memes → DeFi → yield) instead of exiting the chain,” he added. “Only when outflows accelerate or confidence breaks does the loop truly end.”

Still, signs of exhaustion could emerge if stablecoin balances fall or capital starts flowing out of BNB Chain. For now, the ecosystem appears to be recycling wealth internally, echoing Solana’s earlier trajectory.

“The wealth effect doesn’t die when volumes slow; it ends when money leaves,” De Maere concluded.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.