Binance Coin (BNB), the cryptocurrency of Binance exchange, has experienced a strong upward trend in 2021. Since the beginning of the year, the currency has already been valued at more than 692%. The token price on January 1st was a mere US$ 37.72. However, on the day this article was written, it was traded at just over US$ 295. And, according to experts, different factors are influencing this appreciation.
One of them is the bitcoin, believes Yashu Gola, a cryptocurrency analyst. In Investing.com, Gola pointed out that Binance Coin’s rise began after the leading cryptocurrency renewed its price record once again by the time it reached US$ 52,640. Therefore, he believes the move seems to be due to traders who “migrated to BNB after anticipating a broader downward adjustment in the bitcoin market”.
Binance Coin’s upward trend boosts marketcap: from 10th to 3rd place
On the other hand, analyst Crispus Nyaga believes that the volume of transactions at Binance also helps explain the movement. “High volume at Binance tends to lead to more demand for Binance Coin. That’s because BNB is used to feed the Binance ecosystem as the native currency of the Binance chain”, the expert told the website.
This increase, however, is not fortuitous and is due to Binance Smart Chain (BSC). In September 2020, Binance defined BNB as BSC’s native token, a blockchain parallel to Binance Chain that promises high performance but low cost. Thus, it began to attract various DeFi protocols, which seek to escape the slowness and high rates of Ethereum.
“BSC’s daily transaction volume has increased by 300% year-to-date and bolsters an ecosystem of more than 100 DeFi projects”, a Binance spokesperson told Cointelegraph.
With the skyrocketing price, Binance Coin has also taken a leap in marketcap. While on January 31 it occupied the tenth place in the ranking, it is now in the third position. It also makes it the largest currency of an exchange in market capitalization.