Fourth quarterly Binance coin burn scheduled for 18-20 July
BNB prices are having trouble responding to the burn against the backdrop of a bullish market.
Binance has announced the exact(ish) date of its fourth quarterly coin burn. It will take place between 18 and 20 July, and 2,528,767 BNB, worth about US$34.5 million at the time of writing, will be destroyed.
The news is often accompanied by a bit of a price pump and more BNB coins removed from circulation, but in the case of this burn, it might be hard to distinguish it from the optimistic backdrop of the market as a whole since BNB is currently being outperformed by bitcoin and most other coins.
This might not be much of a surprise. The Binance Coin (BNB) has often been a contrarian, regarded as a safe haven coin that can continue to retain genuine functionality, value and deflationary elements through these coin burns. When the markets are down, it often does quite well as people move their funds to a safer cryptocurrency that might go the other way.
Now, with markets seeing a pronounced rise in the last couple of days, people might be moving their funds out of BNB and back into bitcoin and other cryptocurrencies to catch the wave. Binance also recently distributed BNB as part of a one-off rebate, and depending on how much there was to go around, this may also have pushed prices down.
This particular coin burn might be different for other reasons too. It's the fourth quarterly coin burn, which means people might be increasingly aware of BNB's functionality shifting in the future.
BNB can be used for a discount when paying trading fees and other exchange costs, starting at a 50% discount for the first year, dropping to 25% in the second year as more and more BNB is burnt. Some people might be reckoning that a 50% discount is worth it whereas 25% isn't.
It's also worth noting that the burnt coins, making up 20% of the circulating supply at the time, aren't necessarily being bought back. Instead, Binance is most likely burning the public BNB it already has stashed away from people using it to pay fees. At the same time, the rough date of each coin burn is known well in advance so those who expect a price pump of sorts around burn time can buy up in the days and weeks beforehand, rather than only at the last moment.
Binance is on track to have a billion dollar year, and it's reasonable to assume that most of the biggest traders are taking advantage of the discounts offered by BNB. Having $35 million stashed away ahead of the burn is very possible.
It's still a matter of some ceremony though. Binance seems set to be around for a long time, and these coin burns present a very visible deflationary element for the coin in the long run. They're a public event of sorts with the details of the burn contract being made publicly available to everyone who wants to verify that the money really did go into the bonfire.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and NANO.