Key Takeaway
- Binance burns $400 million BNB in latest BNB burn
- Crypto Burn used as a deflationary mechanism
- BNB remains in the top 5 crypto rankings despite Binance problems with regulators
Binance BNB burns have become frequent in recent months. For example, earlier in April, the exchange burned $595.3 million. This was a new record for the exchange, having broken the record set in the previous quarter.
This week, Binance has burned $396 million worth of BNB from circulation. Crypto Burns is a deflationary mechanism that allows crypto projects to increase the scarcity of tokens by making it less available. This ensures that the price of the token is not diluted as adoption rises over the long term.
According to Binance, the number of BNB tokens burned is based on the exchange's trading volume in the previous quarter. Therefore BNB burn is a good indicator that the exchange is in good financial health. Binance intends to burn 50% of all Binance Coins in circulation, according to its whitepaper.
Previous Binance Burns has led to BNB hitting record highs subsequently. However, the current crypto market conditions could prove an exception. Since the fall of crypto prices in May, the price of BNB has shown little progress. BNB has been stuck in a bearish range and fluctuated between $250 and $340 at the beginning of July.
The struggles of BNB have not been helped by the recent difficulties faced by Binance during this period. Binance is under fire from regulators globally and had to suspend several services in Europe. Despite this problems, BNB has remained within the top five cryptocurrencies based on marketcap. It is currently ranked 5th with a market cap of $46.3billion.
Do you think the latest burn by Binance will lead to an increase in BNB price?
