Binance coin (BNB) is hovering near an all-time high as the crypto exchange prepares to burn the 14th BNB token.
The past year has seen an impressive increase in market capitalization in the world’s largest cryptocurrency exchange. Its rise was interesting as it rose from $ 40.9, which was about 10% loss in a day, to $ 45.
It is normal for crypto traders and investors to generally show more interest in coins before BNB burning. The reason is that there is a high expectation that there will be a significant increase in the price of the crypto currency after the burning. Market sentiment often follows the law of demand and supply. When the number of Binance coins (BNB) in circulation decreases, it definitely affects demand and the next price.
With this expectation from current and prospective BNB holders, the token price rose in the market.
The amount of BNB coins in circulation will decrease, which may cause an increase in price.
The coin burning was approved by Binance CEO Changpeng Zhao (CZ). He said he would buy and destroy BNB for 20% of the stock market’s quarterly profit.
Increasing demand for BNB
Token burning is very common in the cryptocurrency industry. Some companies may choose to remove some of their tokens from circulating supply for many reasons. But one of the most important reasons is to prevent the excess supply of token in the market from keeping its price too strong.
As a way to increase token demand, token burning has been carried out by many token developers.
The Binance company whitepaper explained how BNB coin burning will work. According to Whitepaper, the company has suggested it will use 20% of its profits to buy back BNB and destroy it until users get 50% of all tokens back. Binance says it will notify users of all buybacks in the blockchain.