Should you allocate a part of your investment portfolio to BNB?

5th June 2024

As you venture into the crypto world, you will notice many projects, each with unique features, making you feel overwhelmed with the numerous choices. Besides Bitcoin, there seem to be many promising altcoins – while Ethereum is the 2nd most popular crypto, it’s worth noting that it’s not the only one with enormous potential in the market. For example, the BNB coin stands right next to Ethereum in terms of market cap, and it has a solid value that has fueled investors’ interest ever since it became popular in 2021.  If you evaluate the bnb price prediction 2030, you’ll notice that some analysts believe the coin could hit the $2,500 mark by that time, representing a substantial increase of more than 640% from the asset’s current price.

After hearing this prediction, you wonder, “Is it a good idea to add BNB to my crypto investment portfolio?” This is only natural because you want to put your money into a project that has potential and brings you substantial returns. But fret not; we’re here to help you make the right decision and ensure your journey through the cryptocurrency landscape will be as smooth as possible. We will shed light on the BNB coin’s origin, role, and growth potential, so keep reading to learn more. 

BNB: development, role, and key features

BNB is the native crypto of Binance ( one of the biggest crypto exchanges worldwide), and while it launched in 2017 on the Ethereum blockchain, it later moved to the Binance Chain, the proprietary blockchain of Binance, which attempted to solve the issues of high fees and network congestion plaguing the Ethereum blockchain. The Binance Smart Chain appeals to users because of its capability to handle smart contracts and enable developers to build dApps while simultaneously providing low transaction fees and fast speeds. The BInance Smart Chain is among the most widely used in the crypto sector, with BNB being at the core of the Binance ecosystem, fulfilling various purposes such as paying for transaction fees, accessing advanced features, and participating in token sales. 

While the main aim of BNB was to offer a convenient way to pay for transaction fees on the exchange, its use cases and value grew alongside the expansion of the Binance ecosystem. When paying transaction fees with BNB, users receive a discount, one of the features that has appealed to many individuals and turned the exchange into the go-to crypto platform for users over time. Moreover, Binance conducts token sales via its Launchpad platform, where you can only participate with BNB.   The versatility of BNB is a vital contributor to its value, which is only likely to increase as Binance keeps expanding and launching new services and features, but it’s worth noting that the coin has many other key attributes that set it apart from other cryptocurrencies. First and foremost, BNB has a total supply of 200 million coins, and its limited supply translates into scarcity, which could be a key driver for its value over time. 

As an investor, it’s imperative to understand the supply limit of a crypto asset because this will provide valuable insight into its future value, guiding your investment decisions. Another aspect that makes BNB unique is its token burn mechanism. What is this mechanism all about? Well, essentially, Binance utilizes a portion of its profits to purchase back and burn BNB tokens, which decreases the total supply of the coin over time. Reducing the supply could mean that the rest of the BNB tokens will increase in value due to the principles of supply and demand, ensuring that the coin remains an appealing investment for users in the future. 

Factors that impact the price of the Binance Coin

While market experts believe that the BNB coin’s price could increase in the future, there are no guarantees over how the scenario will play out because too many factors could influence the outcome. The price of BNB has gone through massive changes throughout time, and it’s worth noting that the demand for BNB is directly linked to the broader use of Binance Chain for smart contracts and dApps. If more projects choose Binance Chain, the demand for BNB will also naturally increase. The Binance ecosystem’s prosperity also impacts the BNB price, meaning that new features and partnerships that improve the ecosystem will make BNB flourish, too. Moreover, the quarterly token burns remove a percentage of the BNB supply from circulation, resulting in increased asset scarcity, thus lowering the supply and potentially causing a rise in its price. 

So, to recap, when evaluating whether BNB coin is a good investment, you should consider the different factors that could impact its price, including supply and demand, market adoption, token burn events, news and developments, and Binance ecosystem growth.

So, is adding BNB to your investment portfolio a strategic move?

Considering its potential future growth, BNB could be a worthwhile addition to your investment portfolio. Binance has increased dominance in the crypto industry, which gives BNB a solid advantage and positions it as a valuable crypto gainer in the following years. Besides, the BNB Chain keeps innovating, and some of its latest developments have already made waves in the past few years. Moreover, even if Ethereum has transitioned to PoS, it still has high fees compared to the BNB Chain, which offers a more viable option for users. Undoubtedly, BNB has the potential to shine bright in the market, but let’s not forget that it’s not immune to the market’s volatility, so while it might be a good idea to invest in it, a well-diversified portfolio is your ticket to success in the crypto industry.

The Binance exchange offers a myriad of other cryptos that you can explore, including major assets such as Bitcoin and other altcoins with unique features and potential returns. Holding different coins is a wise move because it allows you to spread risk and enhance your chances of achieving more substantial returns, so we recommend taking the time to evaluate the different crypto projects and stick to those you believe in most. 

The bottom line

BNB plays a significant role in the Binance ecosystem and can indeed add value to your investment portfolio, but it’s essential to take the time to understand the different factors that could impact its long-term potential, and only after conducting comprehensive research, decide if it aligns with your financial goals.