- Binance has taken a total of 1.57M BNB tokens (worth around $916 million) out of circulation permanently.
- This means that Binance is closer than ever to its goal of burning its supply down to 100 million tokens.
- The burn hasn’t had much of an effect on the price of BNB over the immediate term, even though a break above $600 could be close.
Binance has achieved yet another milestone in its deflationary roadmap, with its 31st quarterly BNB burn. This burn saw around 1.57 million BNB tokens (worth around $916 million) permanently taken out of circulation, which is great news for BNB over the long term. While this event would normally be highly bullish for BNB in the short term as well, BNB’s price dipped unexpectedly.
This has raised concerns about its market sentiment and what lies ahead for BNB and the general crypto market as a whole. Here’s what this massive token burn means for Binance and BNB holders.
What Is a BNB Burn, and Why Were the Tokens Burned?
A token burn is a procedure of removing coins from circulation completely by sending them to a “burn address.” This is a great way to control the cryptocurrency’s supply and use demand in its favor when it comes to price increases. This move is part of a larger strategy from Binance to reduce the total BNB supply to 100 million from 200 million.
Binance introduced its Auto-Burn mechanism under the BEP95 proposal as a way to bring more transparency into its ecosystem with its quarterly burns. The total tokens burned now depends on two variables, including the price of BNB at publication and the number of blocks produced on the BSC during the quarter. In essence, this makes sure that the token’s circulating supply is aligned with network activity and the outlook of the general market.
This latest burn saw 1.57 million BNB destroyed. This amount is worth around $916 million, with the total circulating BNB supply now sitting at just over 139 million. This means that Binance is closer than ever to its goal of burning its supply down to 100 million tokens. The quarterly burn also aligns well with Binance’s whitepaper promise, which even the exchange’s former CEO, Changpeng Zhao (CZ), says is non-negotiable.
Why Didn’t the Burn Move BNB?
Despite burning such a large amount of tokens, the price of BNB didn’t react as expected. In fact, CoinMarketCap data shows that it has dropped by around 0.5% over the last 24 hours and is now hovering around $578 at the time of writing.
This relatively muted reaction shows the trend of the wider crypto market, where Bitcoin continues to struggle to break the $85,000 ceiling. BNB itself has behaved like this on several occasions, with a similar reaction happening after its 30th quarterly burn. This shows that the excitement around the burns could be winding down now that larger market factors like institutional interest and macroeconomics affect the crypto market more strongly than ever.
Despite these issues, there are signs of optimism so far. For example, last week saw BNB gain roughly 3.8%, with its trading volumes jumping by around 1.5% to an impressive $1.39 billion.
As it stands, the charts show that BNB is attempting to reclaim the $600 resistance level, with the 50-day EMA holding steady. If BNB breaks this ceiling, the next target could be $635, as long as the bullish momentum continues.
