It all started with the collapse of Terra Luna and peaked with the FTX crash. Investors are scared for their bitcoins, moving them out of exchanges in record numbers, with Binance in the spotlight.
Binance users withdrew billions in panic
The popular crypto exchange Binance has reportedly seen outflows worth several billions of dollars in recent days. The Hong Kong-based blockchain analytics platform Nansen announced on Tuesday that around $3 billion had been taken from the cryptocurrency exchange Binance on December 13th.
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After the withdrawals, Nansen said Binance still had $62.5 billion in assets. Binance CEO Changpeng Zhao (CZ) published proof of reserves in November, proving the exchange is fine and it won’t end up like FTX. Despite the fact that Binance has colossal reserves, people are panicking on Crypto Twitter (CT).
Binance has had the highest daily withdrawals since June, with over $2B* in net outflows since Dec 12
*ETH & ERC20 tokens only pic.twitter.com/xZNdZxRCVy
— Nansen 🧭 (@nansen_ai) December 13, 2022
CZ approached this situation on Twitter by saying that some days they have net withdrawals, and some days there are net deposits. He continued by explaining this is “business as usual for us.” CZ even embraces the idea of stress-testing centralized crypto exchanges (CEX).
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As a result, it may take longer than usual to withdraw your funds from Binance due to increased traffic in transfers out of the exchange. A well-known on-chain analytics firm Glassnode also shared how much crypto left Binance in specific cryptocurrencies.
📊 Daily On-Chain Exchange Flow#Bitcoin $BTC
➡️ $795.6M in
⬅️ $1.4B out
📉 Net flow: -$641.2M#Ethereum $ETH
➡️ $578.0M in
⬅️ $891.8M out
📉 Net flow: -$313.8M#Tether (ERC20) $USDT
➡️ $4.1B in
⬅️ $5.2B out
📉 Net flow: -$1.1Bhttps://t.co/dk2HbGwhVw
— glassnode alerts (@glassnodealerts) December 14, 2022
Although CEXes see enormous crypto outflows, this is generally a bullish signal as investors are not necessarily selling. They are just transferring their funds safely into their own software or hardware wallet. This is true HODL situation.
On-chain data of proof of reserves of Binance clearly shows that the crypto exchange has more than enough funds to cover current outflows, so users have no reason to panic or spread FUD (fear, uncertainty, and doubt).
Crypto exchanges will need to be stress tested to see whether there is no other fraudulent market player like FTX. In my opinion, the worst is behind us and Binance users have nothing to be afraid of other than investing in questionable coins and tokens.
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