Can Binance Coin (BNB) Lead This Bull Market After Surging Over 60% in Two Months?

Can Binance Coin (BNB) Lead This Bull Market After Surging Over 60% in Two Months?

Can Binance Coin (BNB) Lead This Bull Market After Surging Over 60% in Two Months?

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Title: Binance Coin (BNB) Soars with Strong Momentum, Key Factors Driving the Price Increase Explored

BNB, the native cryptocurrency of Binance, the world’s largest cryptocurrency exchange, has recently experienced a strong bullish trend, successfully breaking free from the previous bear market slump. In just the past two months, BNB has achieved an astonishing surge of over 60%. What are the key factors that have propelled the price increase of BNB? What are the catalysts driving the bullish sentiment for BNB? This article will delve into analyzing and discussing the future development trends of BNB.

Table of Contents
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Token Properties and Uses of BNB
Regular Token Burn
Factors Driving the Recent Increase in BNB
Successive Launchpool Projects
Settlement with the US Department of Justice
Technical Breakthroughs
Potential Catalysts for BNB’s Bullish Outlook
Increase in Trading Volume During Bull Markets
Release of More Launchpad and Launchpool Projects
Expansion and Growth in New Markets
Web3 Wallet Accelerating BNB Chain’s Ecosystem Development
Introduction of the One BNB Concept: Multi-Chain Strategy and Vision for Large-Scale Adoption of BNB Chain
Can BNB Outperform Bitcoin in Future Gains?
Token Properties and Uses of BNB

BNB was issued through an Initial Coin Offering (ICO) in 2017 and was listed on the Binance exchange just 11 days later. The initial trading price of the token was around $0.1, reaching nearly $700 during the peak of the bull market in 2021. BNB is primarily used in Binance’s platform services and the BNB Chain ecosystem:

In Binance Platform Services:
Fee Deduction: Holders can activate the BNB discount feature on the platform to receive fee discounts.
Usage in Binance NFT platform, wealth management products, or financial services.
Payment and Donations: BNB can be used for payments and donations at online or physical merchants and platforms that support BNB.
Participation in token sales on Binance Launchpad and new coin mining on Launchpool.
In the Use of BNB Chain:
As the gas token for BNB Smart Chain (BSC), Layer 2 solutions opBNB and zkBNB. The transaction fees of hundreds of applications running on these blockchains are denominated in BNB.
Participation in BNB Beacon Chain governance.
Usage in various applications on multiple chains, such as collateralizing or borrowing BNB on the BNB Smart Chain DeFi ecosystem.
BNB permanently removes a certain amount of tokens from circulation through its Auto-Burn system and real-time burn mechanism, resulting in a contractionary effect on the token supply.
In the quarterly “Auto-Burn” of BNB, the burn amount is adjusted based on its price and the number of blocks produced on the BNB Smart Chain in that quarter.
The most recent BNB Auto-Burn took place on January 17, 2024, with a total burn of approximately 2.14 million tokens.
The real-time burn mechanism, which is based on gas fees, burns a fixed proportion of gas fees in every block, determined by BSC validators.
According to data from the BNB Chain explorer, the initial total supply of BNB tokens was 200 million, and the current circulating supply is approximately 149 million (which means that nearly 25% of BNB has been burned). As the goal of BNB burn mechanism is to gradually reduce the total supply to 100 million (50% of the total supply), this indicates that there is still room for further decrease in BNB supply, which will help to boost the price of BNB.

What Factors Have Driven the Recent Increase in BNB?

Although Binance officially stated in its BNB introduction article that BNB holders “do not have any ownership of Binance profits, and investing in BNB does not mean they are investing in Binance,” in practice, the cryptocurrency market is still largely driven by narratives. Therefore, the platform dynamics of Binance often influence the market’s perception of BNB’s price, resulting in volatility. So, what are the factors driving the recent price increase of BNB?

In addition to the market sentiment brought by Bitcoin ETFs, the launch of projects on Binance Launchpool has been a major driving factor for the recent surge in BNB. Binance Launchpool is a new coin mining platform that provides blockchain projects with significant exposure opportunities and helps Binance users explore various emerging blockchain trends.

The operation of Binance Launchpool allows users to stake their BNB or specific stablecoins in the Launchpool mining pool to earn token rewards for the current project, enabling BNB holders to generate additional income from each Launchpool phase. Data shows that the average annualized return rate for the last five new coin mining projects is 125% (calculated only for BNB pool earnings), bringing significant wealth effects to BNB holders.

The price trend of BNB indicates that the release of each Binance Launchpool phase tends to drive a brief price increase for BNB, especially when the overall market is in an upward trend or when the current Launchpool project receives widespread attention, BNB tends to continue its upward momentum.

On November 22, according to Taiwan time, the US Department of Justice announced a settlement with Binance, and Binance appointed Richard Teng, who has a senior traditional finance and regulatory background, as its new CEO. Although the price of BNB temporarily dropped by nearly 14% at the announcement of the settlement, this event seemed to provide an opportunity for BNB’s price to bounce back, with a significant increase of 60% in the past two months.

The US regulatory agency did not accuse the exchange of misappropriating user funds or participating in any market manipulation in its resolution with Binance. This eliminated users’ concerns about Binance and strengthened the confidence of BNB holders. Data shows that Binance’s user funds, after experiencing a brief outflow, have gradually flowed back into the platform, with a net inflow of nearly $5 billion, surpassing other exchanges.

On the other hand, according to data released by Kaiko in January, after reaching a settlement with the Department of Justice, Binance’s market share relative to the other 23 centralized exchanges hardly decreased. The hype surrounding the ETFs in January led to a surge in global trading volume, helping Binance’s market share to recover to nearly 50%. With Binance’s continued expansion in global compliance, it is expected that Binance will maintain its industry-leading position, acting as one of the key indicators of market development.

From a technical analysis perspective, BNB formed a bullish head and shoulders pattern after hitting bottom from June to December last year and started showing an increase in volume from October. Subsequently, BNB continued to exhibit an increase in volume and stabilized at a price of $263 in late December, eventually reaching a key resistance level of $340, achieving the desired surge in that phase.

After a month of short-term correction, BNB broke through the resistance level of a potential long-term double bottom pattern in mid-February, potentially initiating a new wave of upward momentum. Whether this can be sustained remains to be seen.

Potential Catalysts for BNB’s Bullish Outlook

Although the cryptocurrency market has experienced a remarkable surge since the beginning of 2023, the price of Bitcoin has not yet reached a new all-time high. Based on the development of the previous two bull market cycles, Bitcoin tends to break its previous high about 7 months after halving and subsequently experience a new wave of price increases, thereby driving stronger overall market gains.

With the halving of Bitcoin expected to occur in April this year, the potential price increase may push market sentiment to a climax and stimulate the growth of Binance’s trading volume. Given Binance’s massive user base of over 177 million worldwide, users using BNB to obtain fee discounts may increase, driving the demand for BNB and further boosting its price.

As the cryptocurrency market enters a bull market cycle, more and more developers are entering the field. After accumulating and developing during the bear market period, many cryptocurrency projects are beginning to emerge rapidly. Furthermore, with institutional funds flowing back into the cryptocurrency field, the growth rate of the entire industry is expected to accelerate.

In such a market environment, the number of emerging projects seeking exposure and funding support through Binance Launchpool or its token launch platform Launchpad is expected to significantly increase. This also incentivizes more users to purchase and hold BNB.

Binance has been continuously expanding its business into new markets in recent years and is committed to meeting local compliance requirements. For example, Binance entered the Japanese market in 2022 through the acquisition of the SEBC platform and officially launched Binance Japan in August last year. BNB also made its debut in the Japanese market, and Binance Japan has become the platform with the most trading pairs in the country. Binance’s compliance advantages in global markets further create growth potential, and the growth in users in these regions can increase the utilization and demand for BNB.

Binance launched the Web3 wallet last year, significantly reducing the entry barrier for users into the decentralized world by improving the operational flow on the blockchain through providing an intuitive and user-friendly interface. With further integration between Binance’s Web3 wallet and the Binance platform, users’ exploration and usage of the BNB Chain will become more frequent. This will not only bring new active users to the BNB Chain’s applications but also stimulate the growth in demand for BNB itself.

In the recent 2024 outlook, BNB Chain stated its commitment to advancing a multi-chain architecture called the “One BNB” concept. This aims to create a unified solution by seamlessly integrating BNB Smart Chain, high-performance L2 network opBNB, and storage chain Greenfield to meet decentralized computing and storage needs. It also aims to continuously improve performance, speed, security, and cost, making BNB Chain the preferred choice for blockchain developers.

The core goal of this outlook is expected to lay the foundation for a significant expansion of the BNB Chain ecosystem, thereby increasing the value of BNB and its application scenarios. The specific strategies include:

Focusing on specific dApps for large-scale adoption: This includes high-frequency DeFi, artificial intelligence (AI), full-chain games, decentralized physical infrastructure networks (DePIN), decentralized society (DeSoc), as well as efficient infrastructure such as browsers, data indexing, and account abstraction (AA). These areas have attracted significant market attention during this bull market cycle, and the development of relevant dApps should attract capital inflows into the BNB Chain ecosystem.

Evolving from a single opBNB to opBNB Connect: In the future, the high-performance Layer 2 network opBNB of BNB Chain will develop “opBNB Connect,” allowing dApps with potential large user bases to build their dedicated L2 for developing their own ecosystem. All L2s on opBNB Connect can seamlessly interconnect, including cross-chain assets and compositions between different protocols.

Enhancing the scalability of opBNB: Increasing the gas limit from 100 million to 200 million to achieve a target of 10,000 TPS, and designing a data availability layer on BSC based on EIP4844 and Greenfield to reduce transaction costs by 5 to 10 times lower than the current level.

Maintaining the highest performance EVM state and implementing parallel EVM 3.0: In 2023, the block gas limit for BSC increased to 1.4 million, the largest among all EVM-compatible chains, with transaction numbers reaching up to 32 million per day and achieving 2,000 TPS. In 2024, the development focus of BNB Chain will shift to optimizing state and storage, and optimized PBSS (Path-Based Storage Scheme) and parallel EVM 3.0 will gradually be implemented between full nodes and validators.

On the other hand, the core development team is introducing a measure called “Beacon Chain Fusion,” which plans to retire the BNB Beacon Chain and transfer its functionality to BSC. This will simplify the complexity of the BNB Chain and accelerate the decentralization process of the network and governance. It also means that there may be more BNB holders participating in the development of the BNB Chain.

Can BNB Outperform Bitcoin in Future Gains?

Bitcoin has risen more than 200% since the beginning of 2023, while ETH and BNB have increased by approximately 147% and 54% respectively. However, starting from December last year, the price increase of BNB has outperformed these two largest cryptocurrencies in terms of market capitalization. Can BNB continue this strong performance after the halving of Bitcoin?

Based on the development of the past two cycles, Bitcoin tends to lead the price increase in the early stages of a bull market. In the middle and later stages, market funds gradually shift from Bitcoin to various altcoins, resulting in a continuous decline in Bitcoin’s market dominance. If this trend continues in this bull market cycle, BNB is expected to have a larger price increase.

Although Binance is the world’s largest cryptocurrency exchange, BNB holders still need to closely monitor the platform’s operations, market dynamics, and regulatory challenges it faces, such as remaining vigilant about any abnormal on-chain fund movements. At the same time, breakthroughs in BNB Chain’s technology and the continuous growth of its on-chain ecosystem are also crucial factors. They not only serve as the foundation supporting the price of BNB but also important indicators for evaluating its investment potential.