With the burn of BNB, the exchange seeks to make BNB deflationary. The total BNB in circulation decreased by 0.65%.
Cryptocurrency exchange Binance recently burned 1,099,888 units of its native asset Binance Coin (BNB). That amount is equivalent to nearly USD 500 million at the time of writing this article.
This is the 15th quarterly burn of BNB that Binance has conducted to date. The cryptocurrency exchange has burned 15.3% of its total supply, which is 200 million tokens.
When Binance launched BNB in 2017, they announced that they would burn a total of 100 million units of their cryptocurrency. In other words, they would get rid of half the coins in circulation. With this practice, they seek that the asset is deflationary and its price increases. They hope that demand will increase along with their scarcity.
The Price of BNB in the Future Will Make People Understand the Reasons for Its Burn
“With the recent burning, the total supply of BNB has officially decreased from 170,535,825 BNB to 169,432,937 BNB,” according to a post by Changpeng Zhao.
The CEO of Binance considers that “the burn of a token achieves the same economic effects as an airdrop”. He explains that this way it is not necessary to conduct “so many transactions on the blockchain” so that there is “a more uniform distribution”. Besides, he states that “the price of the cryptocurrency will eventually make people understand” the reasons for the burning of BNB.
Binance is not the only cryptocurrency exchange that has burned its native token. For example, the Stellar Foundation decided to burn 50% of its native toke Lumens (XLM) in circulation at the end of 2019.
This Has Been the Largest Burn of Binance Coin in Terms of US Dollars
This has been the largest burn of BNB in history in terms of US dollars. However, there have been bigger ones in terms of Binance Coin. For example, more than 3.5 million BNB (then equivalent to about USD 165 million) ceased to exist in the 14th burn.
In recent months, the price of the cryptocurrency has experienced a considerable increase, which explains this apparent contradiction.
The exchange’s CEO attributes this increase in BNB’s price to several factors. These include the increased use of the Binance Smart Chain (which uses BNB as its native token), Coinbase’s listing on Nasdaq, and the bullish market.
According to Traders, It Is Best to “Buy at the Rumor and Sell at the News”
Until now, each burn of the Binance Coin token has led to an increase in the price of the cryptocurrency a few days earlier. After the destruction of coins, it has dropped for a few days to finally regain the bullish trend.
In the case of this crypto asset, traders could follow the advice to “buy at the rumor and sell at the news.”
At the time of writing this article, each BNB is trading at USD 520. Its all-time price occurred on April 12th, when it reached USD 637. Binance Coin is the third cryptocurrency according to its market capitalization, which currently exceeds USD 79,400 million.
By Alexander Salazar