2021-1-19 17:22 |
The Binance coin (BNB) is close to an all-time high as the crypto exchange prepares to undergo its 14th BNB token burn.
The past year has seen an impressive rise in the world’s largest crypto exchange token by market capitalization. Its rise has been an interesting one as it went from a low of $40.9 to a high of $45, which is about 10% pain within a day.
It’s a normal occurrence that crypto traders and investors usually have more interest in the coins before burning. The reason is the high expectation of a significant increase in the price of the coin after burning. The market sentiment most times act upon the law of demand and supply. Once the number of Binance coins (BNB) in circulation reduces, it always certainly affect the demand and subsequent price.
With this expectation from current and prospective BNB holders, the price of the token has shot upwards in the market.
The amount of BNB coins in circulation will reduce, which has triggered an upsurge in price.
The token burning was confirmed by the chief executive officer of Binance Changpeng Zhao (CZ). He said the exchange will buy and destroy BNB for 20% of its quarterly profit.
Increasing demand for BNBA token burn is very common in the cryptocurrency industry. Some companies may choose to burn some of their tokens from the circulating supply for a lot of reasons. But one of the major reasons is to prevent an excess supply of tokens in the market to keep its price very strong.
Token burning has been carried out by lots of token developers as a way of increasing the demands for their tokens.
Binance’s company whitepaper has explained how the BNB coin burning will work. According to the whitepaper, the company has proposed that it will use 20% of its profits to buy back BNB and destroy them until the users buy 50% of all the tokens back. Binance says it will keep users informed about all buy-back transactions on the blockchain.
The post Binance coin (BNB) close to ATH as burn approaches appeared first on Invezz.
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