The Binance Coin price (BNB) experienced a double-digit percentage rally on Friday after its issuer — cryptocurrency exchange giant Binance — announced that it was doubling the referral bonus for users holding a large number of BNB.
BNB spent most of the previous day trading between $12.25 and $13.00, but at approximately 10:15 UTC the Binance Coin price began to spike. By 12:30 UTC it had reached as high as $16.22, though it has since experienced a moderate correction.
At present, BNB is priced at $15.19, representing a daily increase of more than 21 percent. BNB has a circulating market cap of $1.7 billion, making it the 18th-largest cryptocurrency and ranking it ahead of high-profile projects such as privacy-centric cryptocurrency zcash.
The Binance Coin price surge followed the announcement that the exchange was doubling its referral bonus to 40 percent for select users. To qualify for the bonus, traders must hold at least 500 BNB in their exchange wallets. For users who do not meet this threshold, the commission rate remains static at 20 percent.
Consequently, it appears that BNB shot up in value for several reasons. First, many users below the 500 BNB threshold need to acquire more tokens to receive the commission rate bonus, placing instant buy pressure on BNB markets.
Recognizing this, speculators would have rushed to purchase BNB before the announcement became common knowledge, enabling them to turn a quick profit as the token increased in value.
Finally, it seems likely that many traders will hold at least 500 BNB in their accounts in perpetuity to ensure that they continue to receive the enhanced commission rate, assuming of course that Binance does not later cancel the promotion. This will inevitably reduce the supply of actively-circulating BNB, which — other things equal — could lead to price appreciation over the long-term.
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Last modified: June 11, 2020 10:06 AM UTC