Binance Coin (BNB) is the exchange’s utility token. Additionally, it is utilized to cover transaction fees on the Binance Smart Chain, an ecosystem with a large number of active cryptocurrency projects. At the start of 2021, it was ranked eighth in terms of market capitalization. By year’s conclusion, BNB had climbed to the third position.
Binance (BNB) is a blockchain that also houses thousands of cryptocurrencies which all have their peaks and troughs; therefore, if one or more of their on-chain cryptocurrencies thrives, it can directly increase the price of BNB. An example of this is HUH Token (HUH), which recently had a viral marketing campaign on January 26th, which caused the price to spike whilst BNB plateaued.
In all, BNB increased by more than 1,250 percent in 2021. That is an incredible price rise, but it falls short of the year’s greatest performers.
2022, on the other hand, has been a different story so far. BNB is down about 10% year to date and more than 30% from its all-time high in May last year. Since the 26th, it has continued to trade sideways.
Overall, the market is also down, with whispers of a ‘crypto winter’ entering the ecosystem. Here is a few explanations of why this could be happening.
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The Federal Reserve
Throughout the epidemic, the Federal Reserve implemented a variety of policies aimed at mitigating COVID’s economic impact.
These comprised a variety of different types of economic stimulation and interest rate reductions.
However, inflation increased by 7% last year, reaching its highest level in 40 years.
To counter this, the Fed now intends to reduce its use of economic stimulants.
This implies that it will likely hike rates as early as March, in addition to other monetary tightening measures.
This is occurring at a quicker rate than anticipated, which has upset both stock markets and cryptocurrencies.
As a consequence, some investors are exiting riskier asset types such as cryptocurrency.
Crypto Winter
Binance Coin (BNB) is not the only cryptocurrency to have seen a price decline in recent months.
Almost every major cryptocurrency has seen comparable losses.
Indeed, CoinMarketCap reports that the overall value of cryptocurrency investments has decreased from about $3 trillion in November to around $2 trillion at the time of writing.
Regulation
The threat of increasing regulation looms large over the whole cryptocurrency system.
Numerous nations, including the United States, want to tighten financial encryption regulations this year.
However, it is unclear what form those new restrictions would take – or how beneficial or detrimental they will be to the business.
In 2021, the Binance (BNB) exchange ran into significant regulatory challenges.
Several nations, including Japan, the United Kingdom, Germany, Italy, Hong Kong, Malaysia, Lithuania, and Thailand, have attempted to limit the company’s operations.
Customers in the United Kingdom were previously unable to make deposits or withdrawals to or from their bank accounts.
It also maintains a different website, Binance (BNB) in the United States, with a restricted assortment of currencies and functionality.
The popular cryptocurrency exchange is attempting to get the support of foreign authorities, but as pressure rises in several nations, this may prove to be difficult.
Time to Purchase?
Not only is it the token for a well-known cryptocurrency exchange, but it is also a programmable cryptocurrency, allowing for the development of a variety of apps and new cryptocurrencies on its network.
This also implies that it faces competition from a variety of sources, including rival smart contract cryptos and cryptocurrency exchanges.
BNB has a well-defined use case, which is critical in the crypto industry.
For instance, it owns CoinMarketCap, a well-regarded data source.
Altcoins
As this ecosystem houses many altcoins that have smaller market caps than the behemoth that is Binance (BNB), they have the potential to provide sharper increases in price in comparison to BNB. One coin that managed to fight the red market is HUH Token (HUH).
This token launched on December 6th, 2021.
Even in this bad market, it has continued to make waves.
It seems to be battling the decline as a result of its ground-breaking smart contract referral system.
It works by supplying holders of HUH Tokens (HUH) with a code that, when used for the first time by another new holder, pays the originator of the code 10% of the original transaction.
This ten percent is now collected in Binance Coin (BNB), but plans to collect it in a number of other cryptocurrencies seem to be in the works.
The HUH Token (HUH) seeks to build a strong community centered on influencer marketing, as evidenced lately by a viral Instagram and Twitter social media campaign including well-known influencers, some with over one million followers.
HUH’s whitepaper contains concepts for metHUH, a social media network that would seek to quantify sentiment research in exchange for financial compensation.
Diversification
Diversification is critical – both for cryptocurrency purchases and for your total financial portfolio.
Your cryptocurrency portfolio should ideally comprise a variety of currencies.
For instance, you may invest a significant portion of your funds in Bitcoin (BTC) and Ethereum (ETH), and then diversify your holdings via decentralized finance (Defi), smart contracts, metaverse, and other tokens.
Because cryptocurrency tokens often follow sector-specific movements, a diversified portfolio provides more protection if a single sector declines.
The cryptocurrency industry evolves at a breakneck pace.
Many cryptocurrencies, such as Binance Coin (BNB), gained over 1,000 percent in 2021, but it is unclear at the moment if they can sustain these gains in the next year.
What counts as a long-term investment is how Binance (BNB) performs over the next five to ten years and if you believe it can continue to grow market share.
Prior to purchasing any cryptocurrency, you should do research to ensure that you understand the coin, its management, its business model, and how it compares to the competitors.
Will it be able to retain its top-10 ranking or will it be surpassed by competitors?