There’s a new ‘Coinbase effect’—the Binance Chain pump

There’s a new ‘Coinbase effect’—the Binance Chain pump

Binance has set its sights on usurping Ethereum with its new protocol blockchain. Since its launch, Binance Chain has attracted coins away from competitors, pumping the value of coins that switch. Could the “Binance Chain effect” be the new Coinbase effect?

Since its announcement in 2018, Binance Chain has been one of the most highly anticipated projects in the crypto industry. The exchange’s very own decentralized blockchain platform has now set its sights on surpassing one of the largest cryptocurrency networks in the world—Ethereum.

Mithril (MITH) becomes the first project to launch on Binance Chain, surges 70%
Related: Mithril (MITH) becomes the first project to launch on Binance Chain, surges 70%

Binance has already attracted a slew of existing and upcoming cryptocurrency projects for switching to the new platform. Mithril was the first project to migrate to Binance Chain following its mainnet launch on Apr. 18th.

The decentralized social media platform saw its native coin MITH nearly double in value the day it launched, jumping from $0.04 to roughly $0.08 in less than 24-hours.

While MITH’s value is stabilizing, the effect of the Binance Chain launch cannot be disputed. This has led some to draw a comparison between the exchange’s new decentralized platform and past Coinbase listings.

Coinbase historically has been the most conservative of the major exchanges in terms of coin listings and represented a large percentage of the US (and global) retail markets. If a coin was listed on Coinbase, it was perceived as a stamp of legitimacy, both from a regulatory and risk standpoint. Thus, whenever a new token was listed on the exchange, its value skyrocketed.

The phenomenon was described as the “Coinbase effect.” However, Coinbase’s power over the market has diminished since its peak in 2018. Now, new listings seem to have little effect on a coin’s performance now, as was the case with Stellar’s XLM.

The Binance Chain Effect

Restrictions placed on exchanges based in the United States have allowed Binance to establish a dominant position in the market. With the launch of Binance Chain, its dominance quickly spread and the platform has become regarded as the industry standard for crypto exchanges.

Red Pulse

Red Pulse, a market intelligence platform that connects non-Chinese speaking clients with experts in China’s capital markets, recently revealed its integration with Binance Chain. Following the announcement of the migration, the company’s Red Pulse Phoenix (PHX) coin was up a staggering 42 percent.

Effect on PHX

Enjin

Announcing a partnership with Binance Chain had the same effect for Enjin wallet and its ENJ coin. After announcing support for Binance Chain on Apr. 19th, the coin’s market cap rose from $132 million to $150 million in a matter of hours.

Effect on ENJ

Atomic Wallet

On Apr. 18th, cryptocurrency wallet Magnum also announced that it will begin supporting both the Binance Chain mainnet and the Binance DEX. The same day, Atomic Wallet (AWC) followed suit and saw its coin’s value increase fivefold—jumping from $0.03 to $0.15 in a single day.

Effect on AWC

While these are just a few examples, Binance Chain continues to have a ripple effect on the entire crypto market. Fans of Binance hope these effects prove salient while skeptics assert it cannot as the market adjusts to these announcements.

Filed Under: Altcoins, Analysis, Binance, Crypto Exchanges
Priyeshu Garg

Priyeshu is a software engineer who is passionate about machine learning and blockchain technology. He holds an engineering degree in computer science engineering and is a passionate economist. He built his first digital marketing startup when he was a teenager, and worked with multiple Fortune 500 companies along with smaller firms. When he is not solving transportation problems at his company (Ola), he can be found writing about the blockchain or roller skating with his friends.

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