Amidst internal and external challenges, can Binance’s “traffic effect” withstand risk based on multiple data analysis?

Author: Nancy, BlockingNews

Recently, Binance has been under pressure from both US regulators and the cryptocurrency community. While expressing dissatisfaction with the return on investment, there has also been controversy over the listing standards and returns on Binance. The entanglement with US regulations is bound to be a long-lasting legal battle, and it is widely believed that it will continue until both sides reach a settlement.

Standing at the center of the public opinion storm, as the former “bull market perpetual motion machine,” does the Binance ecosystem have the ability to withstand pressure? Can the value capture of Binance still bring surprises? Is the “traffic effect” of this top cryptocurrency giant still there? BlockingNews attempts to explore the truth from the data.

Market share and on-chain ecology are both accelerating their recovery

Compared with the downturn of mainstream coins, in the past period of time, the market share of CEX (centralized exchange) with active trading volume of concept coins such as BRC20 and Meme, which have grown by thousands of times, has been divided by DEX and the Bitcoin trading market. Data from The Block shows that at the end of May this year, the ratio of DEX to CEX spot trading volume exceeded 21% for the first time, and CEX trading volume was once at its lowest level this year, and has now fallen sharply to 13.9%.

However, behind the seemingly prosperous scene of these popular concept coins are a large number of survivorship biases. In addition to a few “smart money” successful bets, more investors face risks such as insider trading, rushing to be buried, and project running away. Cases of successfully earning high profits are also easier to spread in the community. In fact, the popularity of these altcoins is continuing to decline, and market funds are starting to flee, and market heat is returning to CEX.

Data from The Block shows that as of June 7, Binance’s monthly transaction volume market share reached a peak of 62.01% in February 2023, and began to fall in March and April to 48.58%, which was the time of the Meme and BRC20 frenzy. But after April, Binance’s transaction volume market share began to rise significantly to the current 52.9%.

Moreover, the BNB Chain ecosystem has also begun to recover. According to Messari’s Q1 market performance of 15 L1 public chains, BNB Chain’s financial revenue and market value annual and quarterly cumulative percentage changes ranked second on the list, second only to Ethereum. At the same time, BNB and ETH were also the only deflationary tokens in the first quarter.

BNB Chain browser data shows that on-chain transactions on BNB Chain have been continuously active in recent months. As of June 8th, the total number of transactions on BNB Chain has rebounded to 4.064 million, an increase of 80.2% compared to the beginning of the year. At the same time, in terms of address counts, over 110 million new addresses have been added since the beginning of 2023, an increase of approximately 47.8%.

In addition, BNB Chain’s daily gas fee consumption has continued to grow, increasing by 53.1% since the beginning of the year, which indirectly confirms its ecosystem’s active state. Recently, Binance also launched a new Gas Grant program, which will provide eligible projects with $200,000 in gas fee incentives per month and may attract more projects to join.

It is worth noting that in April of this year, the BNB Chain development team launched BNB Greenfield, a decentralized storage infrastructure, which has been launched on the testnet “Congo” and will launch its mainnet in Q3 of this year. As the data and storage layer of the BNB Chain ecosystem, the launch of BNB Greenfield will further stimulate the growth and prosperity of the BNB Chain ecosystem. In addition, BNB Chain is expected to undergo the “Luban” hard fork (BEP-126, BEP-174, and BEP-221) upgrade on June 12th, which will create a faster and more secure network for users. The optimization of user experience means that it will benefit the BNB Chain ecosystem.

Of course, the most direct relationship with ordinary users is whether the assets listed on Binance can really bring value. “BRC20, Meme and other various random surges, various types of value coins have been ignored.” Under the bear market of cryptocurrencies, the shanzhai coins with returns of tens of times have been favored by funds, which has also caused many “classical players” who believe in value investment to be anxious. The main reason behind the “retail investor revolution” is that assets are heavily discounted in bear market environments, and investors urgently need more stable and generous returns.

Low-priced coins are more likely to capture high growth rates

For players like Meme, small capital and high leverage are the main motivations for participation. In addition to high net worth or institutional users, small and medium-sized investors are also the main participants in the market, which also makes low-priced coins their favorite sector, and the data also confirms this.

Looking at the 11 projects (including two IEOs) launched by Binance in 2023, projects with lower issuance prices have relatively higher gains, such as ID and EDU. This also partly proves that projects with lower unit prices have stronger appeal and are more favored by investors.

Of course, overall, these new projects have shown good market returns. From the perspective of the first day’s closing increase, the average increase of these projects is 383.9%, among which EDU, SUI, and ARB performed the best. From the perspective of the highest historical return rate, the average increase is as high as 823.4%, especially ID and EDU, which increased by 41 times and 32.8 times, respectively. And 83.3% of the projects’ returns are leading Bitcoin during the same period. Looking at the time required to achieve the highest profit, users can achieve the highest return on average after holding for 17 days, and 58.3% of the projects hit new highs within a few days.

Therefore, compared with high-risk assets such as Meme, while Binance acts as a “gatekeeper” for high-quality investment targets, it also brings considerable returns to users in general. Although there has not been a hundred-fold effect project similar to GMT since December 2022, the return on investment of Binance’s listed projects is also quite impressive in the bearish market, and tends to provide users with more stable returns.

“The underlying logic of Binance’s listing is to list projects that can live longer and bring returns to users as much as possible. Here, there is actually a gap in investment research capabilities and aesthetic differences. Which platform can recognize suitable listing projects and timing in the long term, and which platform’s users can live longer, which is the core competitiveness of the platform. (For) the LaunchBlockingd project, the lowest price we can give to users is what we can negotiate, so users who grab the IEO basically have something to gain. But the price in the secondary market is beyond our control. As for who bought the cheap chips and who sold them early, Binance does not control, but the project party must unlock according to the public notice, and Binance will also supervise.” Binance co-founder He Yi recently stated in the community.

Tenfold Profits in Bear Market Still Exist

Looking back at the performance of new listings on Binance in the past, the “listing effect” of Binance, with its outstanding marketing and the liquidity of the top trading platform, has been evident in empowering project parties and providing returns on investment to users. So, in the current bear market environment, let’s take a look at whether Binance’s listing effect still exists based on the return on investment of LaunchBlockingd projects and the BNB held over the years.

According to BlockingNews statistics (priced in USDT), Binance has launched a total of 17 LaunchBlockingd projects, most of which have achieved tens of times returns. From the perspective of holding costs, there are relatively more projects that have acquired high gains at low prices, such as TKO, C98, BETA, GMT, and ID. These projects are more likely to attract most investors. From the perspective of the closing price increase on the first day, the average increase of the 17 projects is 1458.2%, with EDU, ID, HOOK, LAZIO, BETA, and TKO performing the best. The average highest profit in history is as high as 5186.7%, with GMT, BETA, and C98 having the highest returns. In particular, GMT has a maximum return rate of 416.8 times. From the perspective of the time with the highest profit, the average holding time for users to obtain the highest profit is 34 days, with projects that hit new highs within a few days accounting for 52.9% of the total. However, in terms of return on investment, projects with longer holding periods tend to have higher returns.

From the perspective of annual division, in terms of the first-day returns, the number of new listings on Binance in 2021 and 2022 differs greatly, but the average return rate is basically the same, both exceeding 1371%. Although there are only two IEO projects launched on Binance in 2023 so far, the average increase is leading at 2092%. In addition, in terms of the highest historical increase, the average return rate in 2022 far exceeds that of the other two years, exceeding 153.5 times, mainly due to the hundredfold project GMT, followed by 3690% in 2023, with relatively low time costs. The number of LaunchBlockingd projects launched by Binance also corresponds to the market heat. In the bear market, although new projects are emerging one after another, there are still relatively few high-quality projects, and the frequency of new listings has also decreased significantly, without adding new listings just to meet the quantity.

Moreover, according to the participation requirements of Binance Launch Blockingd, the user’s investment quota is determined based on the average holding of BNB. So how has the BNB market performed? According to data, BNB increased by over 11.6 times throughout 2021, while Bitcoin’s returns during the same period were only 64.4%. In 2022, when the market began to decline, BNB fell by about 52.5%, while Bitcoin’s decline was over 65.3%. Comparatively, BNB has stronger resistance to declines. From 2023 to the present, BNB has only risen by about 12.2%, lagging behind Bitcoin’s 62.3%, which is related to the regulatory tightening of cryptocurrency exchanges including Binance by countries such as the United States. BNB, as a platform currency, has also been affected to some extent.

However, overall, in the face of the bear market environment full of regulatory challenges, Binance not only has resistance to declines from the perspective of the activity on the BNB chain and the selection of products, but also has selling points that attract capital. It is not difficult to see that Binance is still competitive, and the entire cryptocurrency market is gradually transitioning to the recovery phase after a long period of calm.

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