Binance Coin has had a very interesting thus far (as of 30/09/19) as it has created a fresh ATH and then dropped by a total of 60% over the following months. In the first half of the year, BNB had managed to soar by a total of 627% after rising from a low of $5.50 to reach a high of $39.60 during June 2019. As BNB reached $39.60, it had created a fresh ATH - making it one of the only top-ranked cryptocurrency projects to do so in 2019.
Since placing the ATH, Binance Coin has rolled over and fallen by a total of 60% to reach the current trading price of around $15.80. Despite this recent price decline, I believe things are still very promising for Binance Coin during 2020 and it will be able to rise to the $44 level, at least, at some point during the year. For Binance Coin to reach the $44 level, it would need to increase by a total of 200% from today’s price.
There are many reasons as to why I believe BNB will be able to turn things around and create another fresh ATH during 2020. The main reason revolves around utility as Binance continues to release new products that will require the use of BNB which, in turn, creates demand for BNB.
In this article, I’ll firstly cover a range of topics that I believe will influence Binance Coin in reaching my $44 target in 2020 and then analyze BNB on the long term daily charts and highlight some areas of resistance on the way higher.
The Nature Of The Beast Is Utility
One of the main reasons as to why BNB will be able to turn around and head toward $44 in 2020 is due to the fact that the utility of BNB continues to increase. The majority of cryptocurrencies (or tokens) on the market do not actually have any intrinsic utility, however, Binance Coin has a large range of usage that continues to grow as the team over at Binance continue to release fresh products.
Binance Coin has an advantage due to the fact that it is the native coin of the largest cryptocurrency exchange in the world - Binance. The team over at Binance really has created an exchange that is unrivaled in liquidity, ease-of-use, and user base. In fact, Binance has a matching engine that is slated to be able to process up to 1.4 million orders per second!
Reduced Trading Fees - The Heart of BNB Utility
The original utility derived for BNB is the fact that traders are able to receive discounts on trading fees when they pay them in BNB. The discount rate had started at 50% and has continued to half each year;
This is important for BNB has it will provide a core utility for the coin over the next few years. Regardless of the market trading condition, traders will continue to trade on Binance and therefore will continue to require BNB to receive their discount. The market can be in an extended bearish condition but traders will still need a service to be able to buy and sell their coins. This makes BNB’s utility “crypto winter” proof as it will still have utility during the drawdown period.
Although the trading discount will finish at the end of the fifth year, I believe Binance will have created a larger range of products that will require BNB as a utility that will allow BNB to continue to grow.
Binance Buy Back Program - Decreasing BNB Supply
Since it’s inception, Binance has pledged to use up to 20% of its profits to “buy back” BNB from the market in order to be burned. This effectively creates demand for BNB as Binance themselves will always be purchasing BNB from their profit each quarter.
The program is well-known amongst original BNB holders and the team has stated that they will continue to buy back BNB until 50% of the supply has been burnt. This will effectively reduce the supply of BNB by half, leaving the final circulation amount at 100 million BNB.
Each quarterly buyback is recorded on the Ethereum blockchain and can be tracked and monitored;
The burning of BNB will reduce the supply which should, according to supply-side economics, help to increase the price for the coin over time. There are still over 80 million BNB to be burned until the 100 million BNB figure has been reached so there will be plenty of buybacks in the years to come!
The Binance Launchpad - Where Projects Are Born & BNB is NEEDED!
Initial Exchange Offerings (IEOs) are now a topic of much discussion as many investors feel these are replacing the older ICO model. An IEO is similar to an ICO, however, the IEO occurs on an exchange - such as Binance Launchpad.
Launched in December 2017, Binance has been pioneers in the IEO game as they were one of the first companies to conduct an IEO. Their launchpad allows developers to come and crowdfund their projects in order to gain funding to take it toward completion. The Binance Launchpad is often described as an exclusive incubator for hand-picked cryptocurrency projects.
The launchpad is considered ‘safer’ for investors due to the fact that each project on the launchpad is vetted by Binance themselves. This greatly reduces the risk for investors as the project has been reviewed by Binance and deemed not to be in its infancy stage and not a “scam project. Furthermore, the project is usually added to Binance exchange after the IEO has ended which leads to a very stable market due to the liquidity that Binance Exchange provides.
The important thing to realize about the Binance Launchpad is the fact that BNB is NEEDED to be able to take part in the IEO.
Binance Launchpad had originally used a ‘first come, first serve’ system for their process but this was quickly changed after many investors were often left frustrated when they could not take part in the IEO. Some of the offerings sold out in a matter of seconds so it was very difficult to be lucky enough to take part.
The team decided to change the process of the IEO to a lottery system in which BNB ownership would dictate the ability for users to be able to participate in the sale. The lottery is drawn in a transparent way to ensure fairness in the process. If your lottery ticket was selected, this allowed you to be eligible in taking part in the IEO sale.
Binance has continued to update and improve their Lottery based sale as it is now based on the number of BNB holdings held over an n-day period before the actual IEO. Users will now have to hold BNB for longer periods of time before the actual IEO event to be able to receive lottery tickets for the opportunity to take part in the sale. This means that during periods of a hot IEO on the Binance Launchpad, BNB will be required to be locked up weeks ahead of the IEO. This increases the demand for BNB during the period and ensures stability as coins are “locked away”.
New Products Launched
Up until now, I have only discussed some of the original usages that Binance Coin has within the ecosystem. However, over the past year, Binance has continued to increase the range of usage for BNB which I will discuss in the following few paragraphs.
Binance Chain - A New Era for BNB
The community was quite surprised when Binance had announced its own blockchain - Binance Chain. After time to digest the information, it appears that this makes sense for BNB. Binance Coin will be the native coin for Binance Chain and will be used for all the transactions that occur, greatly increasing the use case for BNB. Binance has already migrated the BNB tokens from the Ethereum mainnet to the new Binance Chain.
A new decentralized exchange, Binance DEX, was also announced as the first product for Binance Chain. This will be a completely decentralized exchange in which users will not have to trust a centralized service with their funds. Furthermore, a DEX typically respects privacy as users can even begin trading without needed to provide any personal information. The Binance DEX will also allow its users to issue new tokens that can be sent, burnt, minted or frozen due to the new BEP2 token standard that Binance Chain introduces.
Binance USD - A Regulated Stable Coin From Binance
Interestingly, Binance has been allowed to create their own stable coin which is being regulated by a New York regulating body. The NY regulators approved the launch of the new stable coin, Binance USD, that will be developed by Binance. The stable coin is a collaboration between Binance and Paxos, the first regulated company to offer crypto products and services after receiving a limited purpose charter in 2014 by the New York State Department of Financial Services.
Binance USD will be pegged to the US Dollar and will be able to be bought on Paxos and Binance. Initially, trading will be allowed for BUSD against BTC, BNB, and XRP.
Changpeng Zhao, CEO of Binance, had the following to say about BUSD;
“We hope to unlock more financial services for the greater blockchain ecosystem through the issuance of BUSD, including more use cases and utility through the power of stable digital assets.”
Binance US - Bringing Access Back To US Customers
During June, Binance had announced that they were barring access for US customers to their exchange. Although no reason was given, many speculate it was due to the fear of future regulation on the exchange from the SEC.
However, it seems that Binance has resolved the problem with the launch of Binance US. The new US platform is finally up and running and has already started to trade for US customers that have signed up. Binance US is a completely separate entity to Binance and the funds are not interchangeable between accounts.
Trading pairs for BTC, ETH, XRP, BCH, LTC, and TUSD are available for trading with more cryptocurrencies to be added down the line if they meet the regulatory standards.
The launch of Binance US now gives access back to customers in the United States which is extremely important for the future growth of Binance and BNB.
Other notable products for Binance that will increase the utility of BNB include the Binance Market Maker Program, the Binance Lending Platform, Binance Staking, and the newly introduced Margin Trading service. All of these products increase the Binance ecosystem and the utility options for BNB.
BNB Price on the Rise in 2019
There is no reason to be surprised that BNB token was one of the top performing crypto assets this year so far. No wonder as it's one of the very few projects in the space that actually delivers and makes profit. Many investors decided to put their money into BNB during cold winter of early 2019 and the bullish trend was uninterrupted since Jan 1 till June 21, when BNB a price of $37.8 according to the data from Santiment.
The moment Bitcoin has started to gain momentum again shortly after BNb reaching it's 2019's ATH, it looks like investors decided to take profits and hop on Bitcoin's train.
The data shows that, although it may be falling slightly, exchange activity remains pretty high as the team continuously improve the platform that gave birth to BNB. This is promising because if their exchange continues to improve we can expect more traders to use it and, in turn, this will mean that more traders will utilize BNB for trading discounts.
Binance Coin Price Analysis
LONG TERM - DAILY CHART
What Has Been Going On?
Looking at the daily chart above for 2019, we can see that BNB enjoyed a 600%+ price increase in the first half of the year which allowed BNB to rise toward the $39 level. However, since placing this high, BNB has rolled over and dropped aggressively through June to September to reach the current trading level at around $15.
Where Can We Go From Here?
As the market is extremely bearish, we can only assume the market will be heading further south from here. However, I believe that we should be able to rebound at around $10 which will allow the market to start climbing again as 2020 progresses.
Toward the downside, initial support is located at $14.98. Beneath this, support can be found at $14.27 and $14.00. If the selling breaks beneath $14.00, we can expect strong support at $12.78 which is provided by the .886 Fibonacci Retracement level. Beneath this, support can be found at $12, $11.18, $11.00, $10.50, and $10.00. It is around this area at which we should be able to expect a market reversal.
Where Is The Resistance On The Way Up TO $44?
To reach the $44 level, BNB will have to increase by a total of 200% from today’s price. This will be a very slow grind higher, however, I believe we can easily reach this level at some point toward the end of 2020 - especially considering that the utility of BNB will expand as the products highlighted above expand.
We can expect initial strong resistance to be located at $16, $18, and $20. Above this, resistance can be expected at $22, $23, $24, and $25. The resistance between $22 and $25 will be significantly bolstered due to the 100-days EMA and 200-days EMA being located here.
If the buyers can continue to climb above $25, higher resistance can be found at $28, $29.54, and $30. Higher resistance is then expected at $32, $34, $35.27, $38, and $39.60 (previous ATH). Above $40, the buyers will be free to reach the target of $44 if they can clear the resistance at $41.93.
In conclusion, I believe the growth of BNB is strongly related to the ecosystem around Binance. BNB is the main form of utility amongst the products that Binance has been releasing and as they continue to grow, more BNB will be demanded which should help the price to increase. The core growth of BNB will come from demand generated from trading fee discounts, the Binance Launchpad, and the BNB burn program. However, this will now be supplemented with new additions to the Binance ecosystem that includes the Binance DEX, Binance Margin Trading, Binance US exchange, Binance Lending, and Binance USD.
Although we can expect some further price declines in the short term (ending of 2019), we can expect BNB to reverse at one point and start to grind its way higher toward the $44 target.