Binance Coin (BNB) has meteoric growth and becomes the third largest cryptocurrency by market cap.
Binance Coin was not among the top ten cryptocurrencies in early 2021. But with an incredible appreciation, the token that is supported by one of the largest cryptocurrency exchanges in the world, Binance, is now the third largest cryptocurrency by market cap, lagging behind just from Bitcoin and Ethereum with a market capitalization of $ 41.89 billion.
In the week ending February 21, the BNB / USD exchange rate had already appreciated by 100 percent. On Friday, the pair set a new record high of $ 283.39 in a rise that somewhat resembles what happened to the Redditors-backed GameStop stock in January 2021.
But, unlike GameStop’s shares that wanted to hurt hedge funds, Binance Coin’s recovery came along with a handful of upbeat news. At first, its growing role as a utility token – a type of domestic private currency – at the exchange Binance and in many of its ventures appeared to have attracted mass traders.
In retrospect, users can pay BNB as trading fees on the Binance Exchange. They can also use the token to participate in sales of tokens hosted by Binance Launchpad. Most importantly, BNB also powers Binance’s newly launched decentralized exchange, a platform that does not require a central authority to carry out trade-related operations, including custody.
A Cambridge University report released last year showed a 200% growth in cryptocurrency users since 2018.
He noted that more than 101 million users signed up with cryptocurrency service providers – like Binance – in the third quarter of 2020. Given the recent institutional boom, led by MicroStrategy and Tesla’s billion-dollar investment in the Bitcoin market, analysts expect the crypto adoption curve will still grow a lot.
“Tesla will also accept Bitcoin as payment, and Elon’s bold commitment to accelerating Bitcoin adoption is likely to generate even more followers,” noted analysts at Weiss Crypto Ratings. “The endorsement of the richest man in the world must be extremely impactful in the future.”
As adoption grows, exchanges like Binance hope to attract more users, which in turn could increase demand for their BNB tokens. In the meantime, a strong shift towards decentralized finance and the presence of its Binance in that sector would mean further growth for its native token.
So far, investors are betting heavily on this result.
Binance Coin is traded under the risk of massive price corrections, according to the Relative Strength Indicator (RSI) readings on the longer term charts. A look at the momentum meter shows BNB / USD as an overbought instrument, meaning it would need to be neutralized by bears sooner or later.
However, the euphoria around the entire cryptocurrency industry, led by the growing adoption of Bitcoin on Wall Street, could care less about what a technical indicator says. It remains to be seen whether the flagship cryptocurrency could remain at new highs. Otherwise, its price correction could spell trouble for the rest of the crypto market, just as it did in 2018.