Despite the attempted recovery at the beginning of the year, Binance clearly has many challenges in the outlook for 2023. However, it also has some unique advantages.
The cryptocurrency market staged an early recovery at the beginning of 2023, but many remain skeptical as to whether the ongoing rally will last.
Some exchanges, including Coinbase and Crypto.com, continue with their staff cuts in a bid to weather the macro bear market, but others remain resilient. Case in point – Binance.
BNB Coin is the native token of the exchange. It’s a base layer cryptocurrency and operates as the base unit of currency for the Build ‘N’ Build Chain (formerly: Binance Smart Chain) or BNB Chain. It also works as originally intended, as a utility token for the exchange, offering users perks like discounts on trading fees and a nerdy cult of intensely deflationary tokenomics.
The following summary outline is not a precise BNB Coin price prediction. But instead, it provides an overview of some selected major potential headwinds and tailwinds BNB faces over the course of 2023.
The Bitcoin price is the fundamental force of gravity in the crypto exchange market economy. As the price of Bitcoin goes, so goes the price of altcoins.
Although the Ethereum network has increasingly challenged its dominance.
Nevertheless, even at this advanced stage of Ethereum deployment and development, its prices are inextricably intertwined with the economics of Bitcoin. They bear a strong statistical correlation.
So, crypto investors can expect the BNB to take a ride up or down on Bitcoin’s coattails along with Ethereum and other altcoins. The question is, which way will Bitcoin’s price go?
Although there are reasons to be cautious, there are also many reasons to expect a bull run for Bitcoin sometime in 2023.
These include renewed confidence in the crypto sector after several of the bad actors have washed out. 2022’s troubles also renewed all the old reasons to stick with decentralized, Layer-1 cryptos with active user bases over centralized apps with an ERC-20 run by a gaggle of incautious and unscrupulous middlemen.
Bitcoin could also rally on a macro equities rally if stocks pick up in 2023. But mainly, it’s a powerful product with strong fundamentals and a bright future ahead of it through the next decade and beyond.
Eventually, when the macro risk-off mood transitions into risk appetite, these attractive prices will be impossible for investors to pass up. And then there are institutional investors and big hedge funds right around the corner to think about. If Bitcoin gets legs in 2023, BNB will almost certainly be in for the chase.
At the moment, the entire cryptocurrency industry is trapped in regulatory limbo in the United States.
Because of the federalism (shared powers) of the U.S. government and the sophistication of capital markets in our day, no one is sure yet who is really in charge of cryptocurrency.
Crypto is, in fact, so novel an invention that it simply doesn’t neatly fit into the preexisting categories that U.S. legislators, regulators, and courts had dealt with before.
Binance and its platform’s native token are stuck in a worse regulatory trap than its peers on the U.S. front. It hasn’t been able to get listed on any U.S. exchanges other than its own because the proprietors fear it’s a risky token.
They’re concerned, despite its strong, active userbase and enormous market cap, because BNB could suddenly be subject to SEC regulation as a security like stocks and derivatives.
But could BNB be classified as security even in the event the case is brought up?
In its case against FTX Exchange, the SEC argued before the United States District Court Southern District of New York that FTT tokens are securities.
Because part of its argument was FTX exchange has a “buy and burn” program – similar to stock buybacks – and Binance burns tokens out of quarterly profits – crypto exchanges are wary that BNB could be ruled a security.
But it’s not necessarily clear that Binance’s token burns operate the same way as FTX’s buy and burn program. And BNB is not just a liquid digital asset whose market price can be manipulated.
It’s a script for interoperability with developers’ apps and the base layer blockchain, BNB Chain. It’s almost more like a form of speech than it is like a share in a public corporation.
Besides, it would be pretty tough for the situation to end up with Ether classified as a security instead of a commodity born out of a global decentralized computer. And if Ether is a commodity and not a security, it would be pretty tough to make BNB stay a security.
If Congress or an agreement of regulators rules BNB a commodity along with Bitcoin and Ether, it will immediately lift an enormous source of investor uncertainty.
The Forbes Digital Assets Column headlined a story about Binance and BNB Coin: “Binance Is Bleeding Assets, $12 Billion Gone In Less Than 60 Days”
That is an enormous amount of reserves for Binance to draw from internally to fulfill all its customer’s withdrawal orders. You could say it sounds pretty bad, but when the average crypto investor considers that Binance remained solvent, it sounds pretty good.
They were good for the money. Exchange executives have said on multiple occasions that Binance is ready to service and honor every single customer’s withdrawal request, even if it meant withdrawing every penny from the platform.
At some point this month, Binance processed over $7 billion in withdrawals in a single day.
There was no freeze on account withdrawals and new accounts. There were no bankruptcies or SEC investigations. Binance customers just got their crypto out or their money back out. They won’t forget that. It stands as a real-world stress test that sent several other custodians tumbling, but not Binance.
The reputation they have developed out of that will continue to make them irresistible. Investors and traders and new crypto projects with top talent and ideas noticed.
BNB’s biggest tailwind it’s got going for it is the sheer volume of crypto trades executed by its platform and the fees it collects on facilitating those exchanges.
Binance handles billions worth of daily traded volume. It charges fees on those transactions to both cryptocurrency buyers and sellers, ranging in percentages.
According to a recent report by Arcane Research, Binance’s share of BTC trading volume rose over 2022 to finish the year at 92% of trade volume. Arcane Research concluded:
“No matter how you look at it in terms of trading activity, Binance is the crypto market. After lifting trading fees for its BTC spot pairs this summer, Binance completely overtook all market share in the spot market.”
In essence, Binance is a profitable private business that keeps getting greenlighted in more and more jurisdictions across the world.
It seems like the bargain Bitcoin price should attract more eager buyers. But some disagree.
The price of bitcoin is a complex variable comprised of all kinds of macro, fundamental, industry, and technical factors. There’s no guarantee the bottom is in yet, and the crypto winter could go on for another year for all anyone knows until the market has moved.
Bitcoin’s price could take another sustained dive in 2023. It could remain depressed with low volatility. It could rangebound nowhere with no forthcoming rally. That would likely exert a headwind for the BNB price.
Possible bear case scenarios for the Bitcoin price in 2023 are: the crypto business insolvency crisis could continue to unravel badly, there could be more shocks to investor confidence, U.S. regulatory ambiguity toward crypto could, and so forth.
If this happens, crypto investors can expect it to be a headwind for the BNB price as well.
Regulators in the U.S. have been strict toward Binance, probably for security as well as global strategic adversarial reasons. They could soon act to rule BNB as security.
BNB hasn’t been able to get listed on any US exchanges except for Binance US. That could be because they’re concerned regulators could move at any time to rule BNB as a security. If that happens, it will fall under the jurisdiction of the SEC.
This can cause the price to take a beating if it ever happens, but it also will certainly be no death knell for BNB.
Econ, finance, history, and politics nerd. Bachelor of Business Administration. Majored in Entrepreneurship. Wesley loves blockchain and hashbrowns. Contact Wesley: Email
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