Binance Coin (BNB) is the native cryptocurrency of the Binance-based ecosystem. A week ago, BNB reached a new all-time high, jumping to a new price peak for the first time since May 2021. This new milestone marks a big achievement for this coin which started only as a utility token for Binance. This crypto exchange quickly reached the status of the largest crypto trading platform by volumes around the world with BNB going way beyond its initial local utility purpose.
Several important factors have contributed to BNB surging to $793 on December 4 and we will take a detailed look at them here below.
How Binance and BNB Сame about in Brief
Binance exchange was co-founded in 2017 by Changpeng Zhao, widely known as CZ within the crypto community, and a few other personas. CZ was the Binance CEO until November 2023 and during his CEO term he became a big influencer in the cryptocurrency world. Prior to kickstarting Binance, CZ worked for Blockchain.com and was a developer at Fusion Systems. Under his firm leadership, Binance began to actively expand, added support for multiple cryptocurrencies and introduced a great many innovative products for users.
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Binance Coin was launched shortly after Binance was created during the platform’s Initial Coin Offering (ICO) in the summer of 2017. Initially, BNB was built on the Ethereum blockchain. In 2019, CZ had moved from that to Binance’s own newly-developed network called the Binance Smart Chain (BSC) which was later rebranded as the BNB Chain. This transition helped to expand the use cases it offered and transformed BNB from just a utility token used for fee discounts on Binance into something much bigger – a critical asset that fuels the whole Binance ecosystem.
As years went by, BNB became widely adopted by various vendors in different spheres as a payment option. BNB started from becoming the gas token on the Binance, then it became the coin for participating in Initial Exchange Offerings (IEO) that took over ICOs on Binance and its Launchpad platform for new tokens. Besides, BNB began to be used for staking to ensure network security and as a collateral in the BNB Chain decentralized finance (DeFi) ecosystem. Besides, many Binance employees chose to receive a large part of their salaries or even all of it in BNB.
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All these allowed BNB to rapidly grow its market capitalization and enter the top 10 list on CoinMarketCap. It still remains among the top ten coins, despite all the volatility and crypto market turbulence.
BNB’s Previous 2021 All-Time High
Before Binance Coin surged to a new historic peak a week ago, it saw the previous all-time high in 2021, when on May 10 BNB reached the $690 record spike. That happened among the explosive expansion of DeFi, NFTs, the rise of BNB Chain in light of Ethereum’s congestion (BNB Chain rose as a cheap and fast alternative to Ethereum) and also after Bitcoin hit an all-time high of $63,000 in April.
However, after reaching the ATH in 2021, BNB, similar to many other altcoins, faced a substantial setback, particularly when the market was hit by large corrections in 2022 and 2023. Still, in spite of those challenges, BNB kept holding its strong position in the market thanks to its fundamental utility and supported by the continued growth and expansion of the Binance ecosystem.
Factors that Drove BNB to 2024 ATH
Historically, the crypto market always allows altcoins to show explosive growth following Bitcoin’s lead. When Bitcoin reaches a new highest price peak in history, the market sentiment turns highly bullish and this leads to large capital flows into altcoins, including Binance Coin. Besides, BNB is one of the top ten crypto assets, therefore it benefited significantly from the lifted bullish sentiment after Bitcoin’s ATH when it surged to $103,900 on December 5 – a day before BNB reached its latest historic price peak.
Among the reasons that drove BNB to the all-time high was the continuous growth of the Binance ecosystem. The dominance of the exchange in the crypto space has a direct impact on BNB’s price and its market cap. Recently, Binance has rolled out several new features, including wider staking options, trading services for institutions, trading tools powered by AI, etc. All those have attracted crowds of new users and added to the BNB demand. Besides, the exchange has expanded into developing markets, such as Africa and the Middle East.
The BNB burn mechanism that Binance has been using for regular token burns has also played its significant role in pushing the coin’s price up. These burns have been happening consistently, gradually reducing the circulating BNB supply. As of 2024, Binance has burned more than 25% of the circulating supply, contributing to its long-term price increase.
The drastic price surge to the new ATH was also possible thanks to the increased use cases for BNB, the FOMO on the market, retail purchases and whales betting on it, among other drivers.
While CZ is no longer at the steering wheel of Binance, the exchange continues to maintain its leadership in the space with BNB remaining a leading cryptocurrency in the market with stable utility and increasing value. It is likely that Binance, BNB Chain and BNB will continue to shape the present and the future of the crypto space, pioneering new trends and launching new coins, rivalling Ethereum. Thus, BNB remains a promising asset to keep an eye on.
