Binance (BNB) Analysis
In addition to automated chart patterns, altFINS’ analysts conduct technical chart analyses of top 30 cryptocurrencies. We call these Curated Charts and they evaluate 5 core principals of technical analysis: Trend, Momentum, Patterns, Volume, Support and Resistance.
Binance (BNB) technical analysis:
Trade setup: Price remains in an Uptrend. After consolidating in a Bullish Flag pattern, price broke out in the direction of the existing Uptrend and reached our target of $400 for a +30% gain. Price has also broken above $400 resistance; however, it is now very overbought (RSI > 75), Hence, near-term, we’re likely to see it pause here on some profit taking. We would patiently wait for a pullback opportunity for a swing trade entry in Uptrend. (set a price alert).
Pattern: Bullish Flag pattern. Short term small rectangle trading range between diagonal parallel lines. It moves counter to the prevailing price trend observed in a longer time frame on a price chart. It forms typically following a sharp advance and often indicates a small change in direction (or areas of consolidation) before the previous trend resumes. Flag pattern is among the most reliable continuation patterns that traders use because it generates a setup for entering an existing trend that is ready to continue. Trade is initiated on a breakout, if it is in the same direction as the prevailing trend. Also, with bullish flag patterns, traders prefer a breakout with an increase in volume but it isn’t a must.
Trend: Uptrend across all time horizons (Short- Medium- and Long-Term).
Momentum is Bullish ( MACD Line is above MACD Signal Line and RSI is above 55).
Support and Resistance:Nearest Support Zone is $350 (previous resistance), then $300. The nearest Resistance Zone is $400, which it broke, then $450.
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What is Binance (BNB)?
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Binance Coin is digital asset native to the Binance blockchain and launched by the Binance online exchange.
Binance is a crypto exchange that started in the summer of 2017 and quickly became one of the largest in the world by trading volume, recording $200 million in profit in its second full quarter of operation. Binance Coin was launched as an ERC-20 token sold through an initial coin offering (ICO) to be used for discounted trading fees, of which a portion are burned each quarter. Once Binance launched its Chain, its own public blockchain in April 2019, the ERC-20 tokens were swapped for native tokens. On top of Binance Chain, the team built a decentralized exchange known as Binance DEX allowing traders to maintain custody of their funds. Over time, additional utility has been added to the token such as use in the Binance Launchpad lottery system and various payments in the ecosystem. In addition, according to their CEO Changpeng Zhao (“CZ”) 90% of employees choose to receive part of their salary in BNB.
Binance Coin was originally launched as an ERC-20 token on Ethereum until April 2019. Binance converted all ERC-20 BNB tokens to Binance chain BNB coins a couple days after the Binance chain mainnet launched. Two months earlier, the chain’s testnet launched and was used by the internal team and some high-volume traders for testing. Binance’s decentralized exchange (DEX) is built on the Binance blockchain using Tendermint and the Cosmos Software Developer Kit (SDK). Binance forked Cosmos to create the Binance blockchain, which currently does not support smart contract features. Binance aims to use the Tendermint consensus framework to solve some interoperability problems with inter-blockchain communication (IBC). Binance chain source code is currently not open source for competitiveness reasons. But the exchange plans to open source the DEX and blockchain codebases when both products gain more adoption.
Supply Curve Details
Binance initially stated that it would used 20% of the quarterly profits generated by its exchange to buy back BNB on the market and burn them, thus reducing the outstanding supply. Nevertheless, in April 2019, Binance edited the white paper’s section devoted to quarterly repurchasing plans to replace it with a section on quarterly burn plans. In July 2019, Binance announced that it will burn the BNB tokens allocated to the team going forward. As a result, the team allocation, that was initially supposed to be vesting for 4 years, will remain illiquid until all 80,000,000 BNB have been burnt. This reduces BNB’s liquid supply, as these tokens are no longer liquid, but it also reduces the potential liquid supply inflation rate that would have occurred through the vesting of those tokens. As of today, Binance has realized 9 quarterly token burns, leading to the destruction of 14,525,175 BNB: October 2017 – 986,000 BNB January 2018 – 1,821,586 BNB April 2018 – 2,220,314 BNB July 2018 – 2,528,767 BNB October 2018 – 1,643,986 BNB January 2019 – 1,623,818 BNB. April 2019 – 829,888 BNB July 2019 – 808,888 BNB October 2019 – 2,061,888 BNB
It will continue burning an amount of BNB equivalent to 20% of its quarterly profit until the outstanding supply (supply that exists on-chain) reaches 100,000,000 BNB.
Binance Exchange. Most crypto exchanges charge trading fees based on a small percentage of total trade size. Binance was the first to offer discounts on these trading fees if they were paid in the native exchange token. The discount started at 50% for the first year getting reduced to 25% in the second, 12.5% in the third and finally 6.75% in the fourth before being eliminated entirely. These discounts are at the sole discretion of Binance and could be altered at any time.
Launchpad. As a progression of the ICO, Binance first popularized the initial exchange offering (IEO) when they announced in January 2019 that they would be selling tokens directly through the exchange every month. Initially, the sales were done on a first come first serve basis. They since pivoted to a lottery system where users can claim tickets based on the number of BNB tokens held over the prior 20 days. The tickets represent a certain allocation of tokens and are drawn randomly. If selected, the user is committed to purchasing that number of tokens at the listed price.
Binance Chain. BNB acts as the native token used as gas to pay for network transactions on Binance Chain, a high-performance blockchain network. It initially operates with a small pre-selected validator set, but the plan is to transition to a delegated proof-of-stake (DPoS) consensus mechanism where users can vote using their BNB for delegates that will validate blocks to secure the network. There is also a built-in governance module to let BNB holders submit proposals by depositing tokens which are then voted on.
Binance pre-mined 200 million Coins prior to the public sale. Coin’s distribution process had three phases: allocation to founders, allocation to investors, and a public sale. Founders received 80 million BNB (40% of supply) vested over four years. Half of the founders’ allocation was vested immediately. The other half is vested annually through 2021. From Q2 2019, these tokens will be burnt through quarterly burns and will thus remain illiquid until they are burnt. Binance plans to burn 100 million BNB (50% of supply) over time and has successfully executed nine coin burns to date. Investors receive 20 million BNB (10% of supply) with no vesting or lock-up restrictions. The public sale distributed 100 million BNB (50% of supply). Binance launched the ERC-20 Coin in a public sale on July 14, 2017. Half of the funds raised through coin offering were intended for branding and marketing, and roughly one-third of the funds were for platform upgrades and development. Binance executed the token swap from ERC-20 BNB tokens to Binance chain mainnet BNB coins on April 23, 2019. Binance Coins native to the Binance chain are called BEP2 BNB. Pre-selected validators produced blocks after the genesis block on April 18, 2019, and the first ERC-20 to BEP2 BNB swap of 5 million BNB was executed to a wallet belonging to Binance.
Asset profile is provided by messari. Original version can be found at Messari