Binance Coin (BNB) Reveals a New Trend for Altcoins
Binance Coin (BNB) is undoubtedly one of the hottest altcoins of 2019.
Initially launched via an ICO in 2017 to fund the new and now leading Binance crypto exchange, BNB has seen explosive growth this year.
BNB supports many features to do with Binance, including payments for trading fees, exchange fees and listing fees among other things. It is this connection to the increasingly ascendant exchange that likely underlies why BNB has seen a steady growth in value.
Moreover, BNB has seen a growing list of use cases, with the Binance team recently announcing that the coin can be used for everything from payments, to travel and utility, entertainment and crypto wallets.
Most importantly in terms of analyzing recent trends for the coin, BNB is used exclusively to purchase tokens on the exchange’s token launch platform “Binance Launchpad.” This platform allows issuers of new cryptoassets to list them exclusively via Binance in what has become known as an Initial Exchange Offering (IEO).
Binance Coin Spikes
Looking at the chart below, we can see several standout features. Aside from the very impressive 300% growth in the BNB price since the beginning of 2019, we can see 3 major spikes in volume and number of transactions.
It is these spikes where we see the effect of Binance Launchpad and IEOs.
The first major spike we can see is around February 25th – when Binance Launchpad saw the release of the Fetch.AI (FET) token. Only the second project to launch on the platform after BitTorrent Token (BTT) in January, the much-anticipated token sale saw incredible demand – with all FET tokens sold in just 22 seconds to 2758 buyers.
This sale very likely explains the huge transaction count and volume after the sale – as well as the price drop immediately after from $10.09 to $9.54.
There are two dimensions to this: firstly, it’s very possible that many BNB holders who were unable to get hold of their FET tokens sold their tokens immediately after the FET sale closed – pushing the price down. Secondly, it’s likely that many speculators who anticipated increased interest in BNB in the run-up to the FET sale sold their coins immediately after, compounding the effect.
Celer Network (CELR)
The third token sale on Binance Launchpad took place on March 19 and saw another very fast sale, with all CELR selling out in just over 17 minutes. A huge number of potential investors, however, voiced their dissatisfaction with Binance, as only 3129 out of 39,003 buyers managed to get their hands on some CELR, in part at least due to technical problems with the platform.
Again, as with Fetch.AI, BNB holders who didn’t manage to get hold of the new tokens dumped BNB en masse (with BNB speculators likely doing the same) leading to a huge spike in transaction numbers and volume – and also followed by a slide in price.
Binance Announces IEO Lottery
The final noteworthy spike on the chart above wasn’t in fact due to a new token listing but to changes implemented by Binance to the IEO process itself.
On March 25, Binance announced that new tokens released on the Launchpad would no longer be sold on a first-come, first served basis, but via a lottery system. The new structure allocates tickets to get the new token based on the amount of BNB held.
While the announcement displeased a lot of BNB holders, it caused a sizeable pump in BNB price – surging over 15% – with transaction numbers and volume surging in tandem.
What does this mean for traders?
While it’s always a risky game to draw any rock-solid conclusions from these kinds of observations in the crypto market, it’s undoubtedly an interesting trend.
Firstly, if Binance continues to draw the kind of interest it has so far drawn this quarter for new Launchpad listings – even with the new release structure – BNB may prove to be a shrewd investment for 2019.
Secondly, if interest in IEOs continues in this way, both for those issued on Binance Launchpad, and the growing list of exchanges such as OKEx Huobi and Bittrex who are releasing their own IEO platforms, these exchange’s native tokens might see similar price movements in advance of and around launches.