What is the reason for the 400% surge in BNB in ​​30 days? What are the hidden concerns?

Wu said author | Colin Wu

Editor of this issue | Colin Wu

“Everything solid is melting into air,” and in this bull market, “everything solid is skyrocketing.”

BNB's recent surge is particularly astonishing. According to Coingecko data, it has risen by 397% in the past 30 days, repeatedly setting new highs. Its circulating market value once exceeded USDT and ranked third after BTC and ETH.

What is the reason for the crazy rise? What are the hidden concerns?

What is the reason for the crazy rise?

First: Actual Value

There are currently four (types of) projects in the cryptocurrency industry that have some practical value:

BTC (fighting inflation, value storage, internet gold)

ETH (Infrastructure, water, electricity and coal in the crypto world)

Stablecoins represented by USDT (payment)

BNB is the platform token (representing exchange stocks)

(With the rise of DeFi, many tokens with real value have also appeared in the ETH ecosystem)

Therefore, it is reasonable for BNB to surge to the third or even fourth place in terms of market value. As the equity token of the world's largest exchange, it is equivalent to buying Binance shares.

Second: The Coinbase Effect

In addition to the actual macro value, the direct hype effect brought by Coinbase's listing in the short term is also not small. Coinbase's market value has increased from 20 billion, 70 billion, and even 90 billion US dollars. Coinbase's listing has driven and benefited mainstream exchanges.

Currently, the circulating market value of BNB is between 30 billion and 40 billion US dollars, but Binance's number of users, trading volume, and profits are far greater than Coinbase. Coinbase has a compliance advantage, but this is also a constraint. Binance has also repeatedly stated that BNB represents Binance's currency rights, so it will not seek to be listed.

Third: Binance’s own promotion

Binance's BNB-centric strategy is very unified. This strategy has been collectively recognized internally. For a long time, holding BNB can offset the transaction fees of derivatives, which has led many quantitative institutions to hold BNB, while other mainstream platform coins do not have this function. OK and Huobi have issued a second platform token in addition to OKB and HT, but Binance clearly only has BNB as the only platform token.

In addition, Binance Smart Chain uses BNB as its native token and fuel; Binance's signature 1EO has been reduced to only allow BNB holders to draw lots, which has brought very solid demand and scenarios for BNB. He Yi and others have also clearly stated that they only hold BNB. This kind of "milk" is not seen in other platform tokens.

Fourth: Binance’s own development is tied to BNB

In the past, BNB destroyed 20% of its profits every quarter. Although this was later deleted from the white paper, it is also said that this was done to avoid relevant regulatory policies in the United States. On January 19, Binance destroyed BNB worth $165 million at the time (now worth more than $500 million), indicating that the profit in the fourth quarter of last year may have exceeded $800 million.

Binance happens to have a unique advantage: traditional US exchanges are trapped by compliance and cannot compete with them; Chinese exchanges are trapped by the uncertainty of "iron fist strikes" and it is difficult to compete with them. In this gap, Binance can maximize its competitive advantage. CZ said that the number of new users per day has reached 300,000, which is a very amazing number. Some medium-sized exchanges have no more than 100 new users per day.

Since the Binance team holds the largest share of BNB, it can use more BNB with rising market value for external investment. TheBlock previously disclosed that Binance used a huge amount of money to acquire CMC, which was settled in BNB. It can be expected that Binance will make more large-scale acquisitions and investments in the future.

So what are the concerns about BNB? In fact, it is a well-known old story.

First: Government regulation. In July last year, the US SEC authorized CipherTrace to track Binance Chain and BNB. The initial term of the authorization is one year, and it can be extended for up to 4 years. As the market value of BNB rises day by day, it is certain to attract more attention from the US iron fist. Binance management is also highly sensitive to this. CZ often talks about "utility tokens and securities" on Twitter. There will also be some uncertainty on the Chinese government side, and the specific method may be similar to the previous Huobi/OKEx incident.

Second: hacker attacks. As the world's largest exchange, Binance has attracted the attention of the world's top hackers. Binance's technical strength is often questioned, including being attacked by hackers and having a high frequency of downtime. However, the hacker problem can be balanced through some means to avoid being hit too hard. (Picture from coinspeaker)