February was Bitcoin’s (BTC-USD) first positive price month since mid 2018 and it wasn’t the only coin to see gains. In the top 10, Litecoin (LTC-USD) saw a substantial 20% boost through the month (and even more in the last week). Basic Attention Token (BAT-USD) saw the same boost thanks to good press from its browser Brave.
But no coin has had the run of the last five weeks as Binance Coin (BNB-USD), the native coin for the Binance exchange. It’s more than doubled in the last 30 days and is up 42% just in the last seven days alone. It’s led the pack as crypto makes a minor comeback and Bitcoin battles between the $3,500 and $4,000 price zone.
The question is can BNB keep its pace up and stay above the $15 mark?
Binance Exchange Holds Binance Coin Up
Binance Coin is intrinsically tied to its namesake exchange. And that’s a good thing. Binance started as an exchange with some fan fare in 2017 but came to be a recognized leader in user experience and security since then.
Binance has continued its dominance as the most used crypto trading platform — escaping any plaguing reports or security scares — that have troubled competitors.
And here’s the BTC trading volume on Binance. Notice that even as crypto places have popped from eye-watering all-time highs, trading volume on Binance hasn’t deflated. It’s picked up where lesser exchanges have dropped off or closed and become a de facto place for any serious crypto trader to do their bidding.
As long as Binance continues to be a frontrunner as an exchange — and to play a vital role in the crypto market at large, the coin will hold an esteem and value. Certainly this is true as it compares to other exchange tokens. Here’s a comparison of its competitors in the utility space, specifically for exchanging crypto currencies.
Here’s a three-month chart of Binance Coin’s price against its closest competitor in the space (KCS-USD):
Binance Coin’s Value
Binance Coin’s main use is as a fee discounter on the Binance exchange. Holders of BNB that choose to utilize their coin (pay with it) for the low trading fees on Binance can receive up to a 50% discount on those fees. That may not seem like a lot (a standard fee may be half of a cent) but for high-frequency trading or those trading a lot of coins (“whales”) the BNB ownership is a prerequisite.
This site expands on the other uses for Binance Coin — which includes its use as a peer-to-peer currency token (much like Bitcoin) or its use as collateral on Nexo for a crypto-backed loan. Why does this matter? It shows that the wider crypto world views Binance Coin with a legitimacy rarely granted to other coins — even larger ones like Ripple or Stellar haven’t seen the wide-set adoption of Binance.
Some of this is likely because of the reputation of the exchange and that Binance Coin is likely backed up by the exchange’s financial success itself. In other words, it’s not going anywhere.
Still, there have been doubts about BNB value as Binance has announced it will decrease the discount and offset that BNB owners get with Binance trading. Below is the chart and timeline for that fee and discount structure:
So what will continue to hold BNB’s value over time? I think legitimacy will be one. As BNB is still used as a “base pair” for trading and as a coin legitimate enough to be used as collateral for crypto loans, it will continue to be seen as a value holding or “store of value” asset that’s propped up by the success of Binance itself. Or, in other words, it’s a coin with a real team and product behind it rather than relying on a voluminous agreement amongst anonymous masses on a value proposition (like a DASH, Dogecoin or others).
I like BNB as a safe or conservative play in the crypto space. I recommend it to my Coin Agora marketplace followers, especially those looking for that more conservative investment play within crypto (acknowledging the potentially oxymoron there). If the market swings up, BNB will careen with it. If it swings down, there’s still a way to see BNB as a trader’s storage place, a stablecoin of sorts that’s pegged more to the success of Binance than to a fiat currency. An option that provides traders with a route less traveled.
Binance Coin’s success in the early part of this year, and even its ability to not totally fall to a loss of 99% in the bear market of late 2018 shows that crypto traders see a value proposition here. That’s what’s doubled it over the last few months and had it accelerate past peers in March.
The trading discounts might move away but that’s a long timeline and I see BNB as a value play here in 2019 and 2020 that provides a different incentive to holders and traders. It’s the best coin of its kind and pegged to what’s emerging as the best exchange. I like BNB as a buy and see its potential going well beyond the recent rise it’s had.
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Disclosure: I am/we are long BNB-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.