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What Next for Binance after Q2 Record Profit

What Next for Binance after Q2 Record Profit and 50% Transaction fee Reduction?

Binance plans to slash trading fees by 50% continues to elicit mixed reactions, despite the cryptocurrency exchange posting stellar Q2 financial results. While others insist the reduction could have a serious impact on trading volume, others insist the reduction will result in a decrease in buying pressure, on BNB lasting longer in buyer’s pockets.

Binance Record Profits

Amidst the confusion, one thing is clear; Binance has upped its competitive edge as it moves to ensure traders enjoy fast and cheap transaction processes. The reduction in transaction fees should attract more traders into the exchange.

Binance says it generated a profit of $200 million for the second quarter, compared to a profit of $7.5 million reported in the first quarter. The fact that a 2,757% increase came at a time of great uncertainty further underscores growing talk of cryptocurrencies market acceptance.

According to the Chief Executive Officer, Chengpeng Zhao, Profits look set to inch higher in the third quarter as blockchain and cryptocurrencies technologies become mainstream. The change which plays host to over 160 cryptocurrency tokens including BNB token has seen trading volume spike to almost a billion dollars a day.

The increase should allow the exchange to generate more revenues in the form of trading fees. However, it remains to be seen if the proposed cuts will have a positive impact on the bottom line.

Transaction Fees Reduction Impact

BNB token was launched with the aim of facilitating cheap payments within the exchange.  People are normally rewarded with rebates for transacting on the platform using the coin.

According to one user on Reddit, the proposed transaction fee reduction could result in the halving of the value of the token, given that most people could shy away from using their tokens.

According to the trader, other traders will have less incentive to buy the token because of the reduction, which could significantly affect its value going forward. One thing that is clear is that a reduction in transaction fee will significantly affect the popularity of BNB coin when compared to other coins.

A growth in cryptocurrency market, after a recent pullback, should be good for BNB as traders expect its price to spike to the $20 mark. To some traders, the cryptocurrency could be worth more than $100 by the second quarter of next year.

Binance’s trading volume once picked up to $10 billion at the peak of the cryptocurrency bull market.  At that time, BNB token market cap rose to $4.5 billion. After a recent sell-off, trading volumes have shrunk to the $3.4 billion trading range, resulting in a slight dip in the token’s value to $3.2 billion.

While there is no direct relation between trading volumes and the tokens market cap, a spike in trading volume to the $1 trillion mark should have a significant impact on BNB token value.  In this case, the price of the token could hit $500 to $2,500.

However, if history is anything to go by, no exchange has ever stayed at the top of the leaderboards for long. Poloniex once ruled the space, when it comes to trading volumes, before Bittrex came calling and then Binance. It remains to be seen for how long Binance will maintain its edge in the space.