According to our Binance Coin (BNB), BNB is the native cryptocurrency of the Binance Exchange. The cryptocurrency plays an important role in the successful functioning of the exchange. This article will assess the growth potential of the Binance Coin (BNB) as an integral player in the Binance Ecosystem.
Binance Coin (BNB) Controversial Token Burn Mechanism and its Impact on the Price
Burning involves eliminating a portion of cryptocurrencies from circulation by moving them to a dormant burner wallet. No one can retrieve the cryptocurrencies from this wallet, thereby creating market scarcity. This deliberate scarcity generates a potential increase in demand for the remaining tokens, leading to a possible appreciation in their price. As per the official BNB Burn website, the project’s ultimate objective is to gradually decrease the overall supply of BNB from 202 million tokens to 100 million tokens.
In most cases, coin burns happen quarterly or semi-annually depending on the underlying blockchain and its business model. Binance conducts quarterly burns and will continue doing so until the chain destroys 100M BNBs. The most recent BNB burn took place on June 19, BNB/USDT posted a 1.39% price increase on the day of the burn. This was not a significant positive change compared to previous burn events. However, ATZcrypto teams suspected recent friction between the Binance exchange and compliance officials had something to do with it.
Recent Binance Coin (BNB) Forecast News
Already, part of the Binance US team is already facing legal proceedings in Europe and U.S. The exchange is also undergoing scrutiny due to recent layoffs and departures by some senior officials.
The above is the circulating supply chart for BNB showing the total amount, the total burned and the circulating supply. BNB intends to continue burning the coins until it has the maximum possible supply of 100 million BNB.
While the standard burn method is the quarterly burn, Binance CEO ChangPeng Zhao introduced a real-time burning mechanism to speed up the burn rate for BNB. According to the CEO, the current quarterly burn was running slower than expected. Therefore, he introduced BEB-95 real-time burning mechanism to burn a portion of gas fees that customers spend on the Binance Smart Chain (BSC). Data suggests that the method burns 860 BNB on a daily basis.
Potential Regulatory Hurdles for Binance and Their Impact on BNB’s Value
The SEC has multiple times accused Binance Exchange of breaching security laws. As per reports on the SEC website, the Securities and Exchanges Commission charged Binance Holdings LTD with violating security regulations, secretly offering illegal trading services to high-net-worth customers in the U.S. and commingling billions of client funds with operational funds and sending them to third-party services. The announcement of the SEC filing against Binance on June 5th 2023 saw the price of BNB/USDT drop by 5%. Binance has promised to take a strong stand against this accusation by the regulator, however, the unfolding legal debates seem to be drawing doubts and a lack of trustworthiness.
See below, the upper orange line represents the price of BNB/USDT the day before the announcement, and the next day is a drastic long red candlestick that floored at $220 on the 12th of July. It is possible that the SEC Vs Ripple ruling on the same day, in favour of Ripple, stopped the bearish trend. BNB/USD chart by TradingView
BNB has been struggling to overcome the strong downside. The efforts have borne fruit with the price of the Binance Coin breaking above $261 on July 17th. BNB’s 5-day return to $261 from a strong bearish downside at $220 was shortlived and currently, the cryptocurrency is trading around $238. The pair needs to test levels above the 50-day simple moving average at $243 to avoid its current path of least bearish resistance.
Other Regulatory Concerns Facing BNB Include :
- AML and KYC Compliance: Binance exchange might have to introduce stricter and more robust verification measures in order to satisfy KYC and AML laws. While these are good measures, Bitcoin proponents dislike them for reducing anonymity while interacting with decentralized systems.
- Increased Token Listing Scrutiny: New projects may have to undergo strict scrutiny when getting listed on Binance so as to ascertain they are fully compliant. These will not look good for the overall performance of BNB, due to limited liquidity and lack of diverse trading pairs for BNB. Besides, it is stifling for small developers looking to build on the Binance Smart Chain.
Evaluating the Long-Term Sustainability of Binance’s Centralized Exchange Model
The value of BNB will largely depend on the success of Binance Exchange as a parent company, the adoption of the Binance Smart Chain by developers and a thriving DEFI ecosystem around the Binance Coin (BNB). Important factors we considered while evaluating the long-term viability of Binance Exchange include:
Liquidity and Volumes
Major centralized exchanges like Binance and Coinbase deliver high liquidity and trading volumes in comparison to decentralized exchanges. As a result, trade execution is quicker on a centralized exchange than on a decentralized exchange. Even on large DEX exchanges like the Binance DEX face slow execution time due to limited liquidity. However. Binance Exchange has high liquidity and has continued to attract millions of traders and investors. Thereby offering immense opportunities for buying, selling, trading and exchanging digital assets.
User friendly
Binance Exchange has great design principles. The interface is easy to use, and the experience is wonderful. Customer support is often real-time and can be accessed via live chat on the official site, email support ticket or social media via Twitter or Facebook.
Consistent token listing
Token Listing
Token listing on centralized exchanges is fast, consistent and organized. This allows fast on-boarding of new potential projects to the blockchain ecosystem and the availability of diverse trading options.
Security
As a reputable centralized exchange, so much relies on security. Binance has already implemented robust security measures for protecting client funds and safeguarding customer personal information. Typical features include 3D verification for credit/debit card deposits, two-factor authentication logins and hardware authentication.
BNB’s Competition with other Utility Tokens and its Ability to Maintain its Market Position
XRP, Solana and Cardano are some of the strongest competitors for Binance Coin (BNB).
XRP recently won a legal battle against the Securities and Exchanges Commission (SEC), thereby solidifying its position among the top 5 cryptocurrencies by market capitalization or rather the top 3 altcoins in the market.
Binance Coin (BNB) Forecast
However, a coin that proves greater authority against BNB and XRP is Solana. Solana has not backed down in recent months despite the recently increasing regulations. The blockchain platform features lightning-fast confirmation time and low transaction costs. While the SEC described Solana as a security, the altcoin has continued to remain strong with highly promising fundamentals.
Binance Coin (BNB) Forecast: Conclusion
Binance is already a market leader, commanding the 5th position among the top 10 cryptocurrencies by market capitalization. The BNB community is strongly optimistic at the moment in the wake of XRP’s win against the SEC. While the current tight regulations and scrutiny against Binance could drag the coin slower, legal suits have become the new normal in the crypto industry, with the SEC suing companies left, right and centre.
Being sued by the SEC used to mean you probably did something wrong. Now it means you’re probably doing something right.
— Cameron Winklevoss (@cameron) June 6, 2023
 Price Forecast: Assessing the Growth of the Binance Ecosystem){kind=link}
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