Summary
- BNB has experienced a slow-down in institutional movements.
- Happenings in China and the BNB staking program will have the greatest influence on the price movements.
Binance Coin (BNB) hovered below $300 today, reaching highs of $290 before sliding to trade at $280 at press time. The virtual asset was trading at 2% above the previous 24 hours and 26% higher for the week. BNB is still some way off the all-time high of $342 set three weeks ago but with +655% year-to-date returns.
New territory and incentives
BNB has grown in its uses in a bid to become as fluid as fiat currency in facilitating transactions. Its key uses include paying for goods and services and facilitating on-chain transactions. In a bid to become more competitive, BNB has recently introduced a feature that will allow BNB holders to stake on their holdings.
The feature will allow interest rates of between 8.49% and 27.49% in Annual Percentage Yields (APY). The exact interest rates will be dependent on the length of time users wish to lock their BNB tokens. This development is expected to attract more investors.
Elsewhere, Binance exchange has announced that it has given its clients in Arab countries two additional payment platforms. The two platforms include CashU and Moneygram, which recently parted ways with Ripple following the latter’s impending lawsuit versus the Securities and Exchange Commission. The move is a statement of intent by Binance to expand its client base and increase the exposure of its assets to investors.
Emerging threats
For all its recent gains, the Binance platform faces an emerging threat to its operations. Its DeFi segment has recently come under attack, leading to the loss of $31 million. The attack targeted Meerkat Finance, a DeFi platform running on Binance Smart Chain, one week ago.
Four days ago, Dodo Finance, another DeFi provider running on both Binance Smart Chain and rival Ethereum, also came under attack. Therefore, Binance must fix existing security loopholes to minimize such raids frequency or risk irretrievably costly attacks. Ultimately, such attacks may weaken its standing on the popular DeFi platform.
As Binance settles things in the United States, there are indications of trouble brewing in the Chinese market. In the past week, it has emerged that popular Chinese social media app, Weibo, has removed Binance from its platform. This presents a major challenge since it will limit Binance’s exposure to the important market.
The trouble in the Chinese market may hit a crescendo following the revelation of a political angle to Binance Smart Chain’s operations in the country. China is keen on locking out cryptocurrencies and replacing them with state-controlled Central Bank Decentralized Coins (CBDC).
In an “antagonistic” move, an anonymous developer has recently released a game based on the violent 1989 pro-democracy protests that took place in Tiananmen Square, Beijing. Named “Tanks of Tiananmen,” the game, which is built on Binance Smart Chain (BSC), is being seen as an affront on the Chinese government.
The game gives players the freedom to take sides with either the military that killed a reported 10,000 people or taking sides with protesters. The game is seen as an ultimate test on decentralization on the platform.
On the one hand, BNB risks losing value if Binance pulls down the game because it would water down the belief in BSC’s decentralization. On the other hand, inaction by the Binance ecosystem risks the wrath of the Chinese authorities.
The Binance chain operates on fewer nodes, and this has always raised concerns on the actual level of decentralization on the blockchain. BSC’s 21 validators are deemed too few and easier to compromise, raising questions about its sustainability. In comparison, BNC’s peer, Ethereum, has over 11,000 nodes. Any proof of compromised decentralization against Binance could send BNB prices tumbling down.
Technical outlook
BNB will find the first support at $228.7 and the second support at a much higher price of $276.6. Beyond this point, there will be the first resistance at $287.7, beyond which it could retest $300.
