At Terramatris, we continually evaluate emerging opportunities in the crypto market that align with our long-term growth strategy. After careful analysis, we’ve decided to invest in Binance Coin (BNB) – a choice grounded in both BNB's growing utility within the Binance ecosystem and its promising technical outlook.
This article outlines our reasons for choosing BNB, our gradual accumulation strategy, and our long-term objective to leverage this asset through covered calls on the Deribit platform.
Why BNB Coin?
Binance Coin has established itself as one of the most prominent digital assets in the market, consistently ranking among the top cryptocurrencies by market capitalization. Initially launched as a utility token for the Binance exchange, BNB has expanded far beyond its original use case. Today, BNB powers the Binance Smart Chain (BSC), a highly efficient blockchain that supports a broad ecosystem of decentralized applications (dApps) and is widely used for decentralized finance (DeFi) and non-fungible tokens (NFTs).
BNB’s utility and relevance have been consistently reinforced by the Binance platform’s growth and innovation, making it an asset with intrinsic demand. With Binance actively expanding globally and investing in BNB’s underlying utility, we see a strong foundation for BNB's future value. Moreover, Binance's quarterly token burn mechanism permanently removes a portion of BNB supply, which reduces overall availability and could add upward pressure to its value over time.
Our Investment Strategy: Accumulating BNB Over Time
Rather than making a one-time, large purchase, we’re taking a dollar-cost averaging (DCA) approach to accumulate BNB in small amounts weekly and monthly. This gradual approach aligns with our risk management principles, allowing us to avoid potential volatility while capturing long-term growth. Additionally, DCA helps us to minimize our exposure to price fluctuations, as the average cost per unit is spread over several months.
We anticipate that BNB’s price may experience typical market fluctuations, especially given recent regulatory and market shifts. However, this methodical approach allows us to invest in BNB with a focus on its fundamental potential rather than being swayed by short-term price changes.
Our End Goal: Selling Covered Calls on Deribit
Once we have accumulated a substantial position in BNB, our goal is to generate income from our holdings through a strategy known as selling covered calls. Covered calls are an options strategy that involves selling call options on an asset we already hold. By selling call options, we can potentially earn premiums from buyers who pay for the right to buy BNB from us at a specific price (known as the strike price) by a certain date.
We’ve chosen to use the Deribit platform for this strategy. Deribit is a well-regarded options trading platform with a solid reputation for its robust infrastructure and liquidity in crypto options markets. By selling covered calls on our BNB holdings, we can generate a passive income stream, allowing us to capitalize on market conditions and enhance our returns without needing to sell our core holdings outright.
Future Predictions for BNB
Looking ahead, we have a positive outlook on BNB’s potential, especially as Binance continues to solidify its place as a leading global exchange and ecosystem. Some predictions we have for BNB’s future include:
- Increased Adoption in the Binance Ecosystem: As Binance expands its ecosystem with more products and services, including DeFi, NFTs, and gaming, we expect the demand for BNB to increase. This could drive additional use cases for the token, potentially supporting its value in the long term.
- Continued Supply Reduction: With Binance’s quarterly token burn mechanism, BNB’s supply will continue to shrink, which may add further value to the token over time. As supply diminishes, demand dynamics could push prices higher, especially if adoption grows as anticipated.
- Broader Integration Beyond Binance: BNB has the potential to be adopted as a medium of exchange in more platforms beyond Binance. This could lead to increased utility and drive demand as businesses and projects outside the Binance ecosystem see the benefits of using BNB for various applications.
- Potential Regulatory Tailwinds: While the regulatory landscape around cryptocurrencies remains uncertain, clearer regulations could have a stabilizing effect on the market. Binance’s efforts to comply with global regulatory requirements may strengthen investor confidence in BNB, contributing positively to its long-term outlook.
Final Thoughts
At Terramatris, we believe that BNB offers a compelling investment opportunity based on its utility, ecosystem support, and future growth potential. Our plan to accumulate BNB over time, coupled with the income-generating covered call strategy, provides a balanced approach to building value in this asset. By taking a long-term view and leveraging Deribit’s options platform, we’re excited about the opportunities that lie ahead for our BNB holdings.