Binance Coin Price (BNB) Rallies 20% on Crypto Adoption Push
The Binance Coin token (BNB), which currently entitles users to a 25% discount on exchange fees, has seen some serious trading activity over the past 24 hours, running it up by about 20% to over $6.00 before a slight pullback to $5.85.
There are a number of factors that could be at play. Increased trading as a result of Binance’s listing new stablecoins and subsequently attracting new traders is one possibility.
Another is that BNB is rallying on the news that Tripio had added the crypto token as as payment option to allow Binance’s 10 million users to make reservations at 450,000 hotels worldwide.
A third factor could be that the exchange is set to begin the process of conducting its quarterly buy-back commitment. Part of the deal with BNB is that they will use up to 20% of the exchange’s profits – which are sizable, it being the world’s largest crypto exchange and one of the largest exchanges in general, moving an incredible amount of money, over half a billion dollars a day.
Binance buys back up to 20% of its profits’ worth of BNB tokens and then destroys the repurchased tokens, as part of its design. The initial amount generated was 200 million, and there are 190 million left in existence.
During the first four years of its existence – now being in its 17th month of operation – a gradually decreasing discount is applied to regular exchange fees if they are paid in BNB. Demand for the token is therefore generated by traders who want to save on fees, and those who purchased at lower prices can now also garner a profit on the tokens themselves, while essentially trading them for free.
BNB is primarily traded on Binance, with very minor (by comparison) trading also happening at HitBTC, LBank, AirSwap, and others.
It’s hard to put a ceiling on the value of BNB since its primary use case is not an exclusive one. Being that people are not required to pay exchange fees in BNB – although they are incentivized to do so – if the price of a BNB gets too high, it can become less desirable to use for its intended purpose and instead become more of a commodity for exchanging. The less that people want to use it for paying fees, the lower its demand will go. Thus, it’s one of the harder tokens to assess and predict performance on.
Yet, whatever the case, it’s doing well in a mediocre overall crypto market.
Featured Image from Shutterstock. Charts from TradingView.
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