Binance, the world’s largest crypto exchange, has had the largest Bitcoin withdrawals ever recorded, according to data. The company might face a bank run as crypto investors’ confidence continues to decline following the collapse of trading venue FTX and a U.S. investigation into major crypto exchanges.
The market is also benefiting from positive economic data coming out of the U.S. Bitcoin is now trading at a level above its yearly lows. As of this writing, BTC’s price trades at $17,750 with a 4% and 5% profit in the last 24 hours and the previous week, respectively.
Binance Makes a Stand in the Bitcoin Rally in Danger
Dylan LeClair shared data from Glassnode analytic firm on-chain. indicates Binance saw a huge withdrawal of 40,000 BTC within the last 24 hours. These outflows are nearly double the amount seen in July 2021.
The crypto market was experiencing a second capitulation after reaching an all time high of $60,000. Between May and July, cryptocurrency lost over half its value.
The crypto exchange experienced a significant outflow in November as FTX collapsed. However, crypto markets now seem more bearish than at the worst times, 2021 capitulation or the FTX collapse.
The crypto exchange also experienced its worst stablecoin inflow since its inception. LeClair data also shows that Binance has experienced $2.1 billion worth of outflows over the last 24 hours. There are 20 billion stablecoin reserves.
Overall, the exchange has enough funds to cover ten times its withdrawals, but the market sentiment is negative, and crypto investors’ confidence continues to dip. Changpeng “CZ” Zhao, CEO of Binance, welcomed the withdrawals and classified them as “stress testing”:
Today we saw withdrawals (net $1.14bish). This has happened before. We have net withdrawals some days and net deposits other days. It’s business as usual for us. I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis.
Bitcoin exchange outflows are often considered a bullish indicator. With inflation falling and the possibility of a pivot by the U.S. Federal Reserve, outflows have changed in the current environment.
Regardless of market sentiment, however, there is less Bitcoin available on exchanges. These venues have less Bitcoin supply, which means there is more support for a market rally.