Is Binance Coin Worth Buying In 2022?
The third-largest crypto is a strong buy for 2022
Coin Price Forecast predicts that Binance Coin will reach $650 by mid-2022 and end the year at $845, an increase of +55%.
Binance Coin started 2021 at around $37.62 per coin and reached an all-time high of $690.93 on 10th May 2021.
Binance Coin (BNB) has had a very impressive 2021. The utility coin has gone from a popular discount token to a DeFi front-runner in a matter of months. Let’s take a look at why Binance Coin is well worth investing in for 2022.
With a market cap of $89,386,431,123, Binance Coin is the third-largest cryptocurrency, according to CoinMarketCap.
Binance Coin started 2021 at around $37.62 per coin. For much of January and early February, BNB steadily appreciated, reaching $72 by 6th February. Getting close to doubling in value at the start of the year.
And that’s when the magic started. By 20th February, BNB had reached a new all-time high of $305, but that didn’t last long. After a period of intense volatility, by the end of March, BNB started again to reach new highs. First reaching $581 on 12th April, then $606 on 21st April and $690.93 on 10th May.
That’s an almost 20-fold increase in five months!
So, as you can see, Binance Coin made incredible progress in 2021. But to understand if BNB is still a good investment, we must look at why it has increased so much.
Why is BNB Coin Rising?
BNB is rising in price because of the Binance Smart Chain (BSC), a parallel chain for dApps and DeFi Services.
Though the BSC was launched in September 2020, it only started to gain major traction in February 2021. And as we explained above, that’s when BNB’s price really started to take off.
High Ethereum transaction fees are often cited as the primary reason why BSC usage has increased so much.
As Simon Chandler of Cryptonews explained on the 19th February: “Ethereum gas fees are among the reasons for this change. Because the average Ethereum transaction fee is now USD 20 (having risen by over 500% since January 1)”.
Aside from the BSC, BNB also benefits from increased activity on the Binance Exchange, the largest cryptocurrency exchange.
Remember that BNB is primarily used as a utility token. Traders who pay with BNB on the Binance Exchange get a discount on fees.
And so, with the current bullish sentiment in the crypto market, the Binance Exchange stands to gain from increased trading. This increased activity on the Binance Exchange has led to increased demand of BNB increasing its price.
Will Binance Coin Keep Going Up?
Binance Coin may continue to climb in price if the Binance Smart Chain remains an affordable alternative to Ethereum.
Price forecasters seem to agree that BNB will continue to rise in price. For example, DigitalCoin estimates that BNB could reach $769.66 in 2022 and $920.62 by 2023.
Coin Price Forecast is also a bullish forecaster when it comes to BNB. They predict BNB will reach $790 by mid-2022 and end the year at $1,146, an increase of +123%.
Do note though that the BSC still has a long way to go to dethrone Ethereum, which currently has 214 DeFi projects, according to DeFiprime.com.
However, it should be noted that Binance Coin ahead of Bitcoin, having 44 projects while Bitcoin has only 25. And with Bitcoin out of the way, there is little to stop BSC from catching up with Ethereum.
Keep in mind though that Ethereum 2.0 is just around the corner and is expected to lower transaction costs. If this happens, we may see developers reverting back to Ethereum.
Another factor that should be considered is if the Binance Exchange will continue to see increased trading activity.
As mentioned above, high usage of the Binance Exchange could mean more demand for BNB and increase the price.
Is Binance Coin a Good Investment?
Yes, Binance Coin is likely a good investment as it appears to have an upwards trajectory fuelled by the popularity of the Binance Smart Chain.
An increase in price from $37.62 to $690 is tremendous and shows us how much potential BNB has. Plus, hopes are high that DeFi will replace traditional finance, and BSC is perfectly positioned to benefit.
So, to summarise Binance Coin’s chances of being a good investment depend on these three factors:
- Ethereum’s high transaction fees.
- A growing DeFi market.
- High demand for BNB on the Binance Exchange.
As long as these factors remain in play, BNB will continue to be viewed as a great investment.
But some concerns need to be addressed too. The biggest being that the DeFi market could actually devour the Binance Exchange.
As Muyao Shen of CoinDesk explains: “Binance is trying to hold on to its central role in digital-asset markets as upstart DeFi projects like Uniswap, Curve, Balancer and SushiSwap attract a bigger share of industry trading volumes”.
For many, decentralised exchanges (DEXs), like the ones mentioned above are more appealing than Binance, which is centralised. Decentralised exchanges put buyers and sellers directly in contact with each other, cutting out the middleman which reduces the costs of trading.
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- Binance Coin is the third-largest cryptocurrency with a market cap of $85,768,223,924.
- BNB went from $37.62 at the beginning of 2021 to an all-time high of $690 on 10th May.
- Increased adoption of the Binance Smart Chain is the primary reason BNB has risen so much.
- High Ethereum transaction fees have led many DeFi projects to jump to the Binance Smart Chain.
- Binance Coin also benefits from increased trading at the Binance Exchange, where it can be used as a discount token.
- The Ethereum 2.0 upgrade could threaten Binance Coin’s progress as it should lower transaction costs.
- Decentralised exchanges could pose a risk to the Binance Exchange in the future, due to its centralised nature.