Binance, the largest crypto exchange in the world, has experienced the most significant Bitcoin uptake in its history, according to recent data. The company could face a bank run as crypto investor confidence continues to decline following the collapse of trading platform FTX and a US investigation into major crypto exchanges.
At the same time, positive economic data from the US has a positive impact on the market. Bitcoin is back above its previous annual lows. At the time of writing, the price of BTC is trading at USD 17,750 with gains of 4% and 5% in the last 24 hours and the week before, respectively.
Bitcoin rally in jeopardy, Binance makes a stand
Data from on-chain analytics company Glassnode, shared by Dylan LeClair, indicates that Binance has seen a huge withdrawal of 40,000 BTC in the last 24 hours. The outflow is almost double that of July 2021.
At that point, the crypto market was experiencing a second capitulation event after hitting an all-time high north of $60,000. The cryptocurrency lost more than 50% of its value from May to the end of July.
In early November, the crypto exchange saw significant outflows as FTX reared its ugly head. However, the market seems more bearish on crypto exchanges now that there are two of its worst sentiments, during the 2021 capitulation and the collapse of the FTX.
In addition, the crypto exchange has experienced the worst stablecoin outflow since its inception. Additional data from LeClair indicates that Binance has seen $2.1 billion in outflows in the past 24 hours. There are $20 billion in stablecoin reserves.
Overall, the exchange has enough money to cover ten times the withdrawals, but market sentiment is negative and crypto investor confidence continues to decline. Changpeng “CZ” Zhao, CEO of Binance, welcomed the recordings and classified them as “stress tests”:
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 “emphasize withdrawals” on any CEX on a rotating basis.
Bitcoin exchange outflows are often a bullish indicator. In the current context, with declining inflation and a possible pivot of the US Federal Reserve (Fed), the perception of outflows has changed.
However, there is less Bitcoin on exchanges regardless of market sentiment. The less BTC supply in these locations, the more support for a market rally.
