The Skyrocketing BNB: How High Can It Go By The End of The Year?

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Changpeng Zhao or CZ must be the happiest man in the world and he is happy because his wealth has up to more 10x in just a span of 1 month.

Binance and BNB have been around for quite a while now, but they recently rocked in so much that it was impossible to ignore. And I found a couple of unique points that I think you might be overlooking. Whether you have some BNB already or you're thinking about buying some, this article is for you because I'm going to touch about some important questions about Binance and BNB.

Once The Underdog.

Binance - they are once the True Underdog Story. Their founder CZ, worked in the crypto space for several years before deciding to launched Binance in the middle of 2017 with a modest 15 million dollars ICO.

It must have really understood the unmet needs of crypto traders around the world because they quickly rocketed to number 1 overall in terms of volume for all crypto exchanges.

A Rocketing Juggernaut.

Four years later, they're no longer an underdog by any stretch. In fact, it turned into a juggernauts in the crypto space sitting at the very top with a whopping $33 Billion in daily trading volume.

Since their early days, they've launched Margin trading, Futures trading, a U.S. base exchange, decentralized exchange and much more. One thing that you cannot say about them is that they're willing to sit still and just be happy being the King of the Hill because Binance is one of the quickest pace of innovation in the entire crypto space.

In early 2021, at the start of the year, BNB or Binance Coin was worth about $37, in the span of just one month it rocketed to $330 and now sitting around$470 with a new all-time high of $487.40

They now sit at number 3 overall on Coinmarketcap overtaking huge projects like CARDANO and POLKADOTS.

Reasons Why BNB's Price Pumped.

When I was digging further into Binance and all the latest news and happenings, I found two specific points that I think really explains their recent rise. And by understanding more, we can also paint a better picture about where they're headed next;

1. Number one would be their Binance Smart Chain and everything happening around it. This is going to make more sense if we take a step back and look at Ethereum first.Ethereum is the most heavily used blockchain network in the world by a long shot. If you hear people chatting about DeFi projects, NFTs and all those other things, the vast majority of those are built on top of Ethereum.

Ethereum is set up so that when you take an action or make a transaction on their network, you have to pay a fee called gas. The problem is that when everyone's trying to use the network and do their own transactions, gas becomes super expensive and sometimes it can take a super long time for your transaction to even be processed. This is not good for everyday people like us. If things get too expensive and too congested, then we just sit back and don't participate.

Binance saw this golden opportunity and they jump quickly at it. They realized that we're in a bull market right now and Ethereum is still a couple years away from having their big upgrades come. So in the meantime, there's a notable void for quick and cheap blockchain network in the crypto space. Hence, Binance Smart Chain or BSC was born.

Binance Smart Chain is a whole separate Blockchain that runs separately from Binance Chain that was launched in 2019. This is actually pretty funny because it's essentially a clone of Ethereum but much more centralized. How they do that is by getting approval from Binance in order to become a validator for their network whereas Ethereum is totally opposite, anyone from anywhere can participate in running the network.

Because of this trade-off though by Binance Smart Chain can handle twice as many transactions per second and is way cheaper.

Let me just put that into concrete terms for you:

In Binance chain I was seeing $0.30 transactions for gas fees, whereas on Ethereum had a $30 or more has fees. Transactions are 100 times less on the Binance Smart Chain, but instead of building their own blockchain, Binance was really smart to clone Etherium.This turned out to be a super savvy move because it made it easy for different Etherium projects to migrate over. Users can even use common wallets such as MetaMask for the Binance Smart Chain Network without having to switch to a new wallet and learn a new one from scratch.

Instead of ERC-20 tokens in Ethereum, you have BEP-20 tokens in BSC Network. And also their blockchain explorer looks like a carbon copy of Ethereum' Etherscan.

Many of the early projects on BSC has seen huge traction. The Crown Jewel of them all might be PancakeSwap and it's a DEX that's very similar to UNISWAP. It's reached over 50,000 users daily so far with over 1 billion dollar in daily trading volume.

Another project you should keep your eye on is called an Auto Farm. They're a new DeFi project that automates yield farming strategies for users and they have grown to over 8,000 users in the past day with over twenty three billion dollars in daily volume.

Teams also have a really strong incentive to move over to BSC because CZ of Binance will help them get exposure on Twitter and also if Binance it ends up listing them, they can get a huge pump and price appreciation just by the nature of being listed on there.

A super important point to note here is that all these apps running on BSC requires Binance coin or BNB in order to operate or run on there. BNB now has yet another source for demand rather than just a discount on trading fees on their spot exchange. All these builders rushing to BSC and all these traders and investors using their apps are a huge reason why BNB rocketed so much in the past months.

2. The number two reason for BNB's huge rise is that Coinbase is going public soon. Coinbase is a blue chip company, them going public is really a coming-of-age moment for the entire crypto space.

What's important to note here is that Coinbase can serve as a reference point for other crypto exchanges. So once they enter price discovery in Wall Street exchanges, we can start comparing Binance, FTX or even UNISWAP to Coinbase and what I mean by that is that you can build some sort of valuation model based on metrics such as user growth, trading volume and revenue. This leads to what they call a Re-pricing of Exchange Tokens. At least for the exchanges who issue tokens rather than shares.

The Price of BNB in the Future.

Let's do a little bit quick math here to see how much BNB could be worth based on this framework;

Currently BNB is worth $476 as I am making this article with a 38 billion dollar market cap.

If you just assume that Binance grows to equal coinbase, then that $476 BNb becomes $876 now.

How do we get to that $1000 BNB price?

Well the answer once again goes back to Coinbase. I predict that once Coinbase hits the open market, it's going to really soar like we saw Airbnb and other hot tech IPOs do in their first day of trading. I mean, we all know stock markets are incredibly frothy right now and retail investors are jumping into IPOs not giving a crap about what is all about and what they're doing.

Coinbase is a little bit different because they're listening based on DPO rather than IPO, but it doesn't matter in my opinion.

Now, Wall Street and non-crypto investors have an easy way to get exposure in the crypto space through Coinbase. So I fully expect them to bid up Coinbase enormously. That means if Coinbase just rises 50% more to 150 billion dollars and using that same napkin math that we did, BNB would be worth $1,000 in that scenario.

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