What drives Binance Coin (BNB) – One of the top 20 cryptocurrencies by market cap

Binance is an international exchange which deals with fiat currency and other that deals purely on crypto with a market cap of over $1.5 bln. It is a largest Chinese cryptocurrency exchange with transaction volume of almost $2 billion in daily volume. The exchange currently lists over 162 different cryptocurrencies and tokens provides trading pairs with BTC, USDT and BNC with a standard trading fee of 0.1%.

Binance coin(BNB) is an ERC20 token issued on the Ethereum blockchain by crypto exchange Binance. BNB tokens help us to get discount on the services of the Binance platform.

Binance revenue model:

Binance’s revenue will come from the following sources

1. Exchange fees: 0.2% fixed fee per trade.
2. Withdrawal fee: It charges a minimal fee for withdrawals
3. Listing Fee: Whenever new coins and other asset listed on exchange, a small fee charged for listings.
4. Margin Fee: If a trader does margin trading (trade using amount borrowed from a broker and it is like short term loan).

Binance issued 200,000,000 BNB tokens at the time of ICO and promised that no more coins will be generated ever again with 50% sold in the ICO almost 100,000,000, 40% to founding team (80,000,000) and 10% to angel investors (20,000,000).

According to the Binance whitepaper:

“We can use BNB coin for paying any fees on our platform, including but not limited to

1. Exchange fees
2. Withdraw fees
3. Listing fees
4. Any other fee

If we use BNB coin to pay for fees we will get 50% discount in 1st year

25% for 2nd year

12.5% for 3rd year

6.75% for 4th year

No discount for 5th year”

Binance mentioned that they are having a repurchasing plan. Every quarter they will use 20% of their profits to buyback BNB and destroy them until we buy 50% of all BNB.

Till now, Binance has executed three coin burn:

First burn happened on Oct 18th 2017 -986000 BNB coins were burned.

Second happened on Jan 15th 2018 - They burned 1,821,586 BNB coins

3rd Token burn- 2.220,314 BNB or 1% of the Binance coin’s total supply.

The coinburn will reduce the quantity of BNB coins over time and it will increase demand, and thereby increase value.

Binance userbase and its performance:

The userbase of Binance, one of the largest cryptocurrency exchange, has quadrupled from 2 million users in Jan to 9 million, according to Bloomberg.

But profits have been slightly reduced in Q1 to $150 million from $200 million in Q4 on account of decline in trading volumes due to constant weakness in the crypto market. The average trading volume during that period is 1.4 billion. Binance has made a stellar profit during the second quarter at $200 million an increase of 2757% compared to the $7.5m profit made in the previous quarter.

What is driving Binance coin

1. Binance is growing- From the increase in userbase and profits they have posted, it shows that exchange is growing at a stellar pace.
2. Coin burn shows that limited supply which will increase the value of the coin.
3. Much trusted exchange by crypto community. It is easy to operate and has high withdrawal limits of up to $30,000 with no security issue.
4. Binance to allow Fiat Crypto trade through its local exchange slated to open in Malta. The Malta-based local exchange is reported to pair euro with Bitcoin, with plans to add more currencies into the mix.
5. Crypto exchange Binance is working on a project to launch decentralized tokenized bank. It is an effort to bridge crypto with conventional banking.

Technical

Binance coin (BNB) has jumped almost 12000% since its ICO. It ranks 16th in terms of market cap according to coinmarketcap. The pair hits high of $26.47 and shown a huge decline due to weakness in Bitcoin till $5.4600.

The pair has shown a minor recovery after hitting a low of $10.98 till $15.17.The near-term resistance is around $13.98 (100- day MA) and any break above will take the pair till $15.60 (61.8% fib)/$16.62/$18.

On the lower side, near-term support is around $11.55 (trend line) and any violation below targets $10/$9.29.

It is good to buy on dips around $11.55-60 with SL around $10 for the TP of $18.