04 November 2020 | ZebPay Trade Desk
BNB was launched in 2017, a few days prior to the launch of the Binance cryptocurrency exchange. Originally an ERC-20 token running on the Ethereum network, the ERC-20 BNB coins were later swapped with BEP2 BNB on a 1:1 ratio in April 2019 with the launch of the Binance Chain mainnet. They are no longer hosted on the Ethereum network.
BNB is used as a payment method, a utility token to pay for fees on the Binance exchange, and for participation in token sales on the Binance launchpad. BNB also powers the Binance DEX (decentralized exchange). Read more about the technology behind BNB.
Binance Coin (BNB) Snapshot
At the time of writing:
|Market Capitalization||$3,770,217,980 USD|
|Market Rank (by Market Cap.)||#7|
|Current Price||$26.11 USD|
|24 HR Volume||$427,935,077 USD|
|All Time High/Low||$39.57 USD / $0.0961 USD|
|Script in Circulation||144,406,561 BNB|
|Total Supply||176,406,561 BNB|
BNB cannot be mined, since the Binance Blockchain uses the Byzantine Fault Tolerance (BFT) consensus mechanism. Instead, validators are used to validate blocks, and earn BNB for securing the network. Prior to migrating to the Binance Chain, Binance performed coin burns on the Ethereum network using smart contract burn functions. The number of tokens burned would depend on the volume of transactions done over a 3 month period on the exchange. Now however, on the Binance Chain, BNB coin burns no longer take place. Instead, a specific command on Binance Chain is deployed, as opposed to a smart contract.
Since launching in 2017, BNB has appreciated more than 44%. Volatility for BNB has seen a downward trend over the period as more participants get involved. YTD BNB has witnessed an 8% appreciation, with daily return volatility at 4.94% . The table below summarizes BNB returns for different time horizons and the volatility of daily returns as well.
|Holding Period||ALL- TIME||3YR||2YR||1YR||YTD|
As BNB is used as a payment method on Binance, it creates a natural convexity. Hence, lower moves or dips in BNB can be systematically used to accumulate BNBs at lower prices and reduces net fees paid in USDs. This positive gamma or convexity that’s there on lower moves reverses on rally, at least partially, as those who have accumulated BNBs at a lower price will want to keep some part of fees. This results in lower profits booked compared to other coins.
This whole situation should lead to BNB volatility being inversely proportional to Binance trading volumes, and this phenomenon is confirmed in the table above.
At the time of writing, BNB is trading around $26.92 reflecting a loss of 3.7% approximately, over a period of 24-hours.
BNB had a fairly sluggish yet positive October. It crept higher slowly before correction at month-end, continuing into November. It sold off after testing the resistance of $31.8, and it breached the support of $29.5. It now trades near the support of $26.2.
On the Technical front, the picture has deteriorated but we still see some positive signs. RSI levels points to oversold levels after a correction while the MACD line is still positive, though the histogram has turned negative. Price trades just above the 200 day EMA after bouncing off from it. ADX hasn’t confirmed a bearish trend despite correction.
We remain cautiously bullish on BNB with an aim to ride the price till $29 levels or 10% from current levels. The bullish stance will be negated if price breaches below 200-day EMA convincingly.
BNB powers the Binance Ecosystem and is the native token of the Binance Chain. It has several use cases, namely, to pay fees on Binance Exchange and to participate in token sales hosted on the Binance Launchpad. Moreover, more and more vendors are accepting BNB as a payment token. The token also continues to power the Binance DEX as well. BNB has developed significant traction since its launch, and it does seem like it has a lot in store for the future.
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