Binance the Behemoth:
Innovation Trumps Bear Market

April 2019 Issue

Bitcoin Price Continues to Surge

Bitcoin’s value continues to rebound, finding a new height following months of gains driven by strong market fundamentals and surging adoption and technical innovation. On April 23, Bitcoin hit a new high for this year of $5,500, with most the 20 other largest cryptocurrencies also finding themselves in the green for the day. Even more promisingly, Bitcoin found its first golden cross since 2015, in which its 50-day moving average peaked above its 200-day moving average. Of particular note is a report released by digital assets fund Adamant Capital demonstrating that high-earning millennials have shown both a distrust of the traditional banking system as well as an interest in cryptocurrency investment alongside more traditional investment vehicles. As millennials continue to develop their careers and move towards realizing their earnings potential, there is a strong indication that they will funnel more and more of their investment funds into the crypto ecosystem. Out of all the firms rushing to take advantage of these new opportunities, one recent entrant has experienced meteoric growth even in adverse conditions and is poised to soar to new heights as the winds of the market change.

Binance the Behemoth

Binance, founded in 2017 and already considered the world’s largest cryptocurrency exchange in terms of trading volume, has continued to reach even further, unprecedented heights. The exchange strove for success in the challenging conditions of the 2018 market, going toe-to-toe with well-established exchanges such as Coinbase. Now that Bitcoin’s bull market continues to gain momentum, the firm is poised to solidify its advantageous position as it develops new offerings and avenues for investors and market participants.

The exchange reported $78 million in profits for Q1, citing the surging price of Bitcoin as well as various altcoins as the catalyst. This profit surge represents a staggering 66% increase over the prior quarter’s revenue. CFO Wei Zhou mentioned in an interview that Binance had seen a sizable increase in both trading activity and demand as a result — and that increased demand has also driven developers to stretch further to new segments of the market. Even in the bear market of 2018, Binance managed to rake in $446 million of profits over the year, showing that it can succeed in even the wintriest of cryptocurrency climates. Given this success through adversity, it is clear that now that the market is on the mend, they will continue to experience similar success throughout the rest of 2019.

Following this news, on April 23, Binance launched its own decentralized exchange, Binance DEX, powered by its Binance Chain. This new launch represents Binance’s fulfillment of an announcement from December 2018. Binance DEX represents the exchange’s basis for issuing new cryptocurrencies and ICO tokens, and is now officially live following a two-month test period involving a simulating trading competition and development sprint. As a community effort, many of its newly developed features were contributions made by Binance’s users. Binance Coin (BNB), already the world’s seventh-largest cryptocurrency by market cap, will likely experience increased growth and usage as a result of the company’s efforts. Changpeng Zhao, the CEO of Binance, endorses the benefits of decentralized exchanges, stating that they give market participants more direct control over their assets and increase transparency within the ecosystem. Given that centralized exchanges have suffered severe breaches in the past and are by their very nature a tempting target for thieves, it seems prudent to deter them by developing systems that are simply more difficult to steal from. As decentralized exchanges do not hold the funds directly, and instead give their participants direct agency over their wallets, it will engender further participation and usage.

Zhao further announced that Binance’s Singapore branch will officially open in April. Speaking at a panel at Deconomy — a South Korean conference featuring panels on blockchain and distributed economy — Zhao revealed that the fiat-to-crypto exchange would open this month, but did not offer further details at that time. The exchange officially went live on April 24 and currently allows for purchasing Bitcoin with Singaporean dollars, with plans to add further altcoins as Singaporean regulations permit. Binance previously mentioned plans to expand into Malta, and denied rumors that it is abandoning this branch, citing a desire to hire additional personnel on the island as of March 2019. This follows on Binance’s prior expansion into Uganda, and Binance has expressed a desire to potentially expand into Argentina among other countries.

Conclusion

Binance is a sterling example of a firm that can succeed and innovate even in the throes of a challenging market. They had not been in operation for even a year when the price of Bitcoin crashed in 2018, and rather than close up shop, they posted strong profits and competed with established firms. As they continue to expand into new countries and launch their new decentralized exchange, they are prepared to show the cryptocurrency world how they will perform in a stabilizing and strengthening market.

If you have questions about our fund or would like to be sent investor documents, you can contact our investor relations department at contact@varys.capital.

Regards,

Darius & Saul
Managing Partners

*Article was written April 2019

Varys Capital is a total return fund providing secure access to the digital asset class through venture capital and quantitative trading strategies.