The Corona crisis is boosting the business of Binance, the world’s leading crypto exchange: The company announced that it is seeing a sharp rise in revenue. The trend is also expressed in the Burn program for Binance Coin (BNB).
The crypto exchange Binance sees itself as one of the economic winners in these uncertain times, which are characterized by the global impact of the corona virus. In its most recent quarterly report for January to March 2020, Binance states that it has burned 3,373,988 Binance Coin (BNB) with a value of approximately USD 52.5 million. This is a new record for Binance, the company says. As Binance has committed itself to remove BNB from the market in accordance to the business performance, the quarterly burn program is a key indicator of Binance’s profitability. In the meantime, a good 10 percent of the original 200 million BNB have been eliminated.
What Binance learned during the year and plans for the future
At Binance, CEO Changpeng Zhao himself usually reports to customers and investors every quarter. CZ is presenting a calm tone in view of the global crisis situation, which is at the same time characterised by great optimism for the crypto industry and Binance. About his own portfolio, CZ writes that he is going long for Bitcoin (BTC) and BNB, so he expects significant price gains.
For BNB, this strategy can be reinforced by the business figures of Binance: The turnover on Binance’s spot market has grown by 91 percent compared to the 4th quarter of 2019 and now exceeds 150 billion US dollars, driven by Bitcoin futures trading. Daily visits to Binance’s online presences are more than five times higher than pre-Corona levels, outpacing the growth of competitors. This is a clear contrast to the crypto winter of 2018/19, for example, when price drops were also reflected in lower turnover, web traffic and active traders, according to CZ.
As Binance no longer focuses its burn program for BNB on actual profit, but rather on revenues, comparisons of the business figures from an outside perspective are difficult. But CZ gives an indication: they want to use around 25 percent of annual profits for purchases. Binance recently acquired the data platform CoinMarketCap, for which it is said that 400 million US dollars have been invested. By way of comparison, Binance’s profit in the 2018 financial year was around 446 million US dollars.
Looking into the future, Changpeng Zhao refers to strategic projects in China, where Blockchain solutions are supported by politics to the fullest extent. At the same time, Binance has also launched a coronavirus aid programme, supporting China with tens of thousands of equipments.
CZ sees the further development of the Binance Chain as further proof of the success of the solutions offered. The company is also working hard to guarantee full service for institutional customers when it comes to crypto. India in particular, along with China, plays an important role in these considerations.
Conclusion: Binance withstands the crisis
As a private company, Binance is not directly subject to any obligation to publish its business results. However, in the past, analysts have been able to use the quarterly voluntary disclosures as a basis for their own investigations. There is therefore no real reason to doubt the success of CZ and Binance. For you as an investor, this gives rise to two considerations:
- To participate in the success of Binance, BNB remains the appropriate instrument. The consistently applied strategy of reducing the number of BNBs should also be reflected in the price performance in the medium term.
- Market leadership and cash reserves will enable Binance to enter into a direct battle with the competition in case of crisis. In plain language: Binance continues to provide its customers with high liquidity, which ensures transparent pricing, and can convince with a fair fee policy.