Binance Coin (BNB) price prediction: Exploring a path to potential growth

Binance Coin (BNB) price prediction: Explore potential growth paths and factors influencing BNB's future performance.

May 27, 2024 - 11:43
May 27, 2024 - 11:44
Binance Coin (BNB) price prediction: Exploring a path to potential growth
Binance Coin (BNB)

Cryptocurrencies are notorious for their volatility, yet BNB Coin has defied expectations with its stable and reliable performance. Originally known as "Binance Coin," BNB continues to play a crucial role in the Binance ecosystem, offering exclusive benefits on the Binance exchange and serving as the native currency for various blockchains within the ecosystem.

Despite consistently ranking among the top five cryptocurrencies by market capitalization, BNB tends to fly under the radar in news headlines. This unassuming success has left many investors curious about the future of this digital asset and its growth potential in the years ahead.

What is Binance Coin (BNB)?

BNB, which stands for "Build and Build," serves as the native cryptocurrency of the Binance ecosystem, recognized as the world's largest centralized exchange based on trading volume. Launched in 2017, BNB has swiftly become a cornerstone in the cryptocurrency realm. As of May 15, 2024, it holds the fourth position among cryptocurrencies in terms of value, boasting a market capitalization of $85.97 billion.

BNB functions as Binance's native altcoin and has a maximum supply of 200 million, with a circulating supply currently standing at 153 million. This reduced supply is a result of Binance's buy-back initiatives, which have contributed to the coin's impressive price growth.

As an altcoin, BNB offers users various advantages within the Binance platform, including reduced trading fees, access to exclusive token sales, and the ability to engage in transactions on the Binance ecosystem blockchains. The coin's adaptability and the strong reputation of the Binance brand have cemented its status as one of the most recognizable and traded cryptocurrencies in the market.

BNB's price history

BNB was initially valued at just $US0.15 during its ICO in 2017 and has since seen remarkable growth. Despite enduring various market downturns, it has proven resilient to volatility, with few extended periods of price stagnation.

In its early stages, BNB's price ranged from the mid-teens to $US40. However, its fortunes changed drastically in 2021 during the cryptocurrency market's surge. BNB hit an all-time high of $US690 at the peak of the pandemic-induced market frenzy.

After reaching this peak, BNB's price went through some turbulence as the broader crypto market encountered challenges, including the collapse of Terra Luna and the FTX incident. Robert Quartly-Janeiro, chief strategy officer at Bitrue, noted that "the lowest price since the peak was $US205 in late 2023, influenced by company-related news."

"BNB has shown itself to be quite resilient to market downturns," Quartly-Janeiro told Forbes Advisor. "While it has been sold off, the price of BNB has not often remained stagnant." This attribute distinguishes BNB from many other cryptocurrencies, which often experience prolonged periods of stagnation after significant price drops.

The coin's strength was further emphasized earlier this year when the Securities and Exchange Commission (SEC) approved 11 Bitcoin spot exchange-traded funds (ETFs) for trading in the US. These approvals sparked a broader market rally that saw BNB's price rise above $US580, just below its 2021 peak.

What is the expected performance of BNB in 2024?

Looking forward to BNB's performance in 2024 requires careful consideration of the factors influencing its price movements.

Quartly-Janeiro highlights the influence of Binance's popularity on the altcoin's prospects. "BNB offers discounts on trading fees on Binance itself, making it popular among platform users," he notes.

As the largest crypto exchange globally, Binance boasts consistently high trade volumes and serves nearly 190 million users in over 180 countries. This status alone generates significant demand for BNB, potentially explaining its resilience to sudden price drops.

However, Quartly-Janeiro also observes a decline in Binance's market share, from a peak of 60% a few years ago to as low as 32% in January 2024. This trend could impact BNB's price, given its close ties to Binance's success and popularity.

Additionally, Quartly-Janeiro points out two key influences on BNB's price: broader digital asset movements and the fate of Binance itself. The latter has become increasingly complex, with Binance facing regulatory challenges, fines, and even executive imprisonment in certain markets. These events have sometimes led to a "sell the news" response, causing BNB's price to drop.

Despite its ties to Binance, the BNB ecosystem has expanded beyond the exchange, encompassing three blockchains, each with its own decentralized applications ecosystem. BNB serves as the native token for these chains, necessary for transaction fees and a dominant token pairing for liquidity pools.

Several factors will likely shape BNB's performance in the remainder of 2024. Quartly-Janeiro highlights the broader macroeconomic environment, the post-halving sell-off's persistence, trust in BNB as a base altcoin, planned developments, and Binance's resolution of regulatory issues.

Quartly-Janeiro acknowledges Binance's proactive approach to addressing regulatory concerns, noting that "to its credit, it is seemingly resolving [these issues] at a rate of knots."

What lies ahead for BNB? Examining the bullish and bearish scenarios

The bullish scenario offers an optimistic view, exploring situations where BNB's price could rise, while the bearish scenario takes a more cautious stance, outlining reasons for potential price declines. By considering these contrasting viewpoints, we can develop a comprehensive understanding of the altcoin's potential paths.

Bull case

A bullish outlook for BNB could be driven by several factors. Quartly-Janeiro suggests that "widespread buying by investors either holding it for the first time or using it as a safe haven to exit other altcoins" could significantly increase demand and, consequently, BNB's price and market capitalization.

Furthermore, if Binance were to gain a larger market share, re-enter previously exited markets, or establish itself as a leading player in new markets, these developments would be seen as positive fundamentals for BNB.

"You might hear discussions or approvals of BNB ETF products or the firm announcing partnerships with organizations like Visa or Mastercard," Quartly-Janeiro notes.

The growth of the BNB chain ecosystem could also drive demand for BNB, as it is necessary for users to transact on any chains using BNB as the native currency. Similar to Ethereum and its native token ETH, BNB chain users would likely acquire some BNB to hold in their wallets for transaction fees, reducing the number of tokens available on the market and boosting demand.

Macroeconomic factors could also play a role in driving demand for BNB. Quartly-Janeiro points out that "a drop in inflation leading to higher disposable income or economic contagion leading to flight from fiat currencies" could increase interest in cryptocurrencies like BNB.

Additionally, increased integration of BNB with purchases of real-world goods and services, supported by trust in Binance, could further contribute to the coin's growth.

Bear case

While the bull case appears strong, several events could lead to downside risks for BNB and potentially cause a significant sell-off.

Quartly-Janeiro highlights the macroeconomic environment as a major concern, as it has historically been a key driver of crypto markets. Recent data from the US shows that inflation remains stubborn, and despite the pause in rate hikes, there are lingering concerns.

"(Investors) may need to liquidate digital assets to finance day-to-day spending in a tough inflationary environment," Quartly-Janeiro explains.

Perhaps the most significant risk to BNB's future would be any threats to the survival of Binance itself. While BNB's direct relationship with the exchange as its native token has advantages, it also exposes BNB to collapse if anything happens to the exchange. As seen in late 2023, negative news for Binance is interpreted as negative news for BNB. However, Quartly-Janeiro notes that "challenges to the survival of Binance" could negatively impact BNB but considers this scenario "unlikely given its reserves and international following."

BNB's future will be influenced by a complex mix of factors, including investor sentiment, macroeconomic conditions, and the overall health of the Binance ecosystem. While there are potential risks and challenges ahead, Binance's strong position and the exchange's proven resilience suggest that the coin has the potential to withstand challenges.

Is BNB a good investment?

When evaluating BNB as an investment, it's crucial to assess its historical performance, current market standing, and both bullish and bearish scenarios. While BNB has solidified its position in the cryptocurrency market, its suitability as an investment for an individual hinges on their confidence in the Binance ecosystem, belief in its future, and overall confidence in the success of crypto.

"With a degree of certainty, owing to the global nature of Binance as a firm with 7,000 staff and its resources, BNB will benefit from being more actively managed than other coins," Quartly-Janeiro explains. "Binance engages in buybacks of BNB when the price falls or when they anticipate the market moving in their favor." Furthermore, the increasing utility of BNB, fueled by Binance's global reach, user trust, and strategic partnerships, bolsters the coin's long-term potential.

Regarding BNB's reputation as an investment, Quartly-Janeiro acknowledges it as one of the most popular and recognized digital assets. However, whether this popularity translates into a good investment hinges on individual perspectives and risk tolerance.

Between 2018 and 2021, BNB's price remained below $41, making it an affordable investment opportunity for many.

"On an inflation-adjusted basis, BNB has performed remarkably well since its inception, which is why people invest in digital assets: to combat declining purchasing power," notes Quartly-Janeiro.

With BNB's price surpassing $500, the investment landscape for the coin has shifted.

"In order to witness significant appreciation, widespread adoption of BNB as a digital asset would be necessary," Quartly-Janeiro suggests. While many speculate that BNB could exceed $600 in 2024, the potential for modest gains may not outweigh the increased risk at the current price level.

When asked about BNB's viability as an investment from a purely quantitative, risk-reward standpoint, Quartly-Janeiro was cautious: "Given BNB's price is just below its peak, mathematically you'd have to say 'no' at present." This assessment aligns with the conventional investment wisdom to buy low and sell high.

Ultimately, whether BNB is a sound investment for an individual hinges on their personal circumstances. While all cryptocurrency investments come with risks and uncertainties, BNB's strong market position, active management, and potential for increased utility suggest it will likely remain a significant player in the digital asset space.

"BNB is certainly here to stay; whether it's a good investment depends on whether you like the ecosystem and believe in the company's plans for it," concludes Quartly-Janeiro.

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