Binance, the world’s largest crypto exchange, has seen the most significant Bitcoin withdrawal in its history, according to recent data. The company could face a bank run as crypto investor confidence continues to plummet following the collapse of trading venue FTX and a US probe into major crypto exchanges.
At the same time, positive economic data from the US is having a positive impact on the market. Bitcoin is back above its previous yearly lows. As of this writing, BTC is priced at $17,750 with gains of 4% and 5% over the past 24 hours and the previous week, respectively.
BTC price is trending down on the daily chart. Source: BTCUSDT trade view
Bitcoin rally under threat, Binance takes a stand
Data from on-chain analytics firm Glassnode, shared by Dylan LeClair, shows that Binance has seen a massive withdrawal of 40,000 BTC over the past 24 hours. The outflows are almost twice as high as in July 2021.
At the time, the crypto market witnessed a second capitulation event after hitting an all-time high north of $60,000. The cryptocurrency lost over 50% of its value from May to the end of July.
In early November, the crypto exchange saw a significant outflow as FTX plummeted. However, the market on crypto exchanges appears to be more bearish now than at two of its worst sentiments, during the 2021 capitulation and FTX collapse.
BTC outflows on Binance are increasing. Source: Glassnode via Dylan LeClair
Additionally, the crypto exchange has seen its worst stablecoin outflow since inception. Additional data from LeClair shows that Binance has seen $2.1 billion in outflows over the past 24 hours. There are $20 billion in stablecoin reserves.
Overall, the exchange has enough funds to cover 10x its withdrawals, but market sentiment is negative and crypto investor confidence continues to plummet. Welcoming the payouts, Binance CEO Changpeng “CZ” Zhao called them a “stress test”:
We saw some withdrawals today ($1.14 billion net). We’ve seen this before. Some days we have net withdrawals; Some days we have net deposits. Business as usual for us. I actually think it’s a good idea to “stress test” withdrawals at each CEX on a rotating basis.
Bitcoin market outflows are often a bullish indicator. In the current context of declining inflation and a potential US Federal Reserve (Fed) pivot, the perception of capital outflows has changed.
However, there is less bitcoin on exchanges, regardless of market sentiment. The lower the BTC supply in these locations, the greater the support for a market rally.
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