Binance Coin (BNB) Keeps Bucking the Bearish Trend, Here’s Why

Francisco Memoria
  • In the last three months, Binance's BNB token went up from $9 to about $17 as demand keeps increasing.
  • The token has been becoming increasingly valuable thanks to Binance's moves in the market.

At press time, most top cryptocurrencies are up anywhere between 0.5 and 2 percent, while Binance Coin (BNB) is up by over 8 percent in the last 24-hour period. This has been an ongoing trend. This year most cryptocurrencies struggled, while BNB kept rising.

According to CryptoCompare data, Binance Coin went from roughly $9 to $17.05 in about three months, an 85 percent rise. During the same period bitcoin, the flagship cryptocurrency, dropped from $8,600 to $6,500, a 24 percent fall.

The ERC-20 token’s performance is mostly explained by the cryptocurrency exchange behind it. Binance is notably among the top crypto exchanges by trading volume, as it traded $800 million worth of cryptocurrency in the last 24 hours, with BNB making up well over 10 percent of its trading volume.

According to Binance’s whitepaper, the ERC-20 token gives holders significant discounts on its platform’s fees. These discounts are set to decrease over time as in the exchange’s first year the discounts are of 50 percent, while in the second they’ll be of 25 percent. Moreover, the exchange will use 20 percent of its profits to buy back tokens and destroy them every quarter, until half of its 200 million supply has been bought back.

It’s worth adding the exchange recently helped its token surge after announcing it was going to double referral rewards for those who hold 500 or more BNB. This helped increase demand, while increasing scarcity as those who have over 500 tokens won’t sell so they can keep on enjoying a 40 percent commission on referrals.

The cryptocurrency exchange has recently announced it’s going to launch a separate decentralized exchange (DEX), in which the token is going to play a fundamental role. Moreover, crypto lending platform Nexo has revealed it will accept BNB as collateral for its loans.

Increasing demand while buying back and burning tokens to reduce Binance Coin’s supply is naturally helping drive the cryptocurrency’s price up, seemingly turning it into a token that can be used to hedge against the cryptocurrency ecosystem’s ongoing bearish trend.

As CryptoGlobe recently covered, independent financial research boutique Fundstrat Global Advisors launched a “Benchmark Crypto Performance” report that details the performance of various cryptocurrencies. It notably featured Binance Coin as the number one token.

Binance itself, as its token keeps growing, is set to improve liquidity provided to users by offering fiat-to-crypto trading pairs this year through a Malta-based exchange, while keeping Binance a pure crypto-to-crypto platform.

Ethereum Co-Founder Tells Binance CEO Crypto Can Do More Than Reform Money

Ethereum co-founder Vitalik Buterin has told Binance CEO Changpeng Zhao that cryptocurrencies can do more than just “reform money,” adding the crypto community should expand beyond the finance mentality.

In a tweetstorm, the co-founder of the second-largest cryptocurrency by market capitalization argued that some of the most popular narratives in the cryptocurrency space do not apply to this year’s crisis. Per Buterin, while Bitcoin was created n the aftermath of a global financial crisis in 2008, this year we’re dealing with a “virus crisis,” a crisis related to epistemology, and one of “overbearing policing.”

As a result, he said, the narrative bitcoiners user surrounding inflation is not the best one to use right now, taking into account that while the Federal Reserve’s balance sheet has been growing, inflation isn’t.

Buterin added, pointing to the March crash in equity markets and in the cryptocurrency space, that Bitcoin and other cryptos are also not uncorrelated to traditional assets, as at the time both dropped significantly. While Bitcoin has since recovered to give investors positive returns YTD, the S&P 500 has been struggling to climb back up to its highs.

Nevertheless, Buterin argued that it is time for the cryptocurrency community to understand “finance is relatively less important this decade than it was in the last decade,” and adjust to this new reality. The co-founder of ETH added his cryptocurrency already has various applications that go beyond finance, including governance, decentralized communities, censorship-resistant publishing and communication, and more.

Per his words, stablecoins have succeeded in the space because users are not trying to get away from the U.S. dollar, but are instead moving into the cryptocurrency environment to have more options on what they can do with their own money.

He then pointed to a tweet from Binance CEO Changpeng Zhao arguing “Bitcoin is the peaceful protest,” and claimed that “reforming money is not sufficient” and the crypto community needs to expand its mentality.

Buterin went on to say that 2016-.2020 is a “period of ideological realignment. Many old ideologies and coalitions are dying, and many new ones being born. The hills and valleys on the battlefields are shifting.”

Featured image via Unsplash.