Binance CEO reveals startling truth about asset outflows

TL;DR Breakdown

  • Nansen’s data reveals that over the past seven days, there has been a net outflow of $2.36 billion from Binance, with an additional $123.7 million flowing out of Binance.US.
  •  In a Twitter post, CZ argued that some third-party analytics platforms may skew the interpretation of exchange outflow data.
  • CZ further explained that during times of market volatility, large inflows, and outflows are not uncommon.

In recent days, there has been a notable increase in the outflow of crypto assets from centralized exchanges, particularly from Binance, one of the world’s largest cryptocurrency exchanges. This trend has been observed by leading analytics platforms such as Nansen and DeFiLlama, which have recorded significant amounts of funds flowing out of Binance following the news of a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against the exchange.

Nansen’s data reveals that over the past seven days, there has been a net outflow of $2.36 billion from Binance, with an additional $123.7 million flowing out of Binance.US, the U.S.-based subsidiary of Binance. Similarly, DeFiLlama reported an even higher figure of $3.35 billion in outflows from Binance. Glassnode, another prominent analytics provider, has also noted a decline in Binance’s balance by approximately $1 billion or 5.7% during the same period.

Binance CEO responds to outflow rumors

However, CEO Changpeng Zhao, widely known as CZ, has offered a different perspective on these outflow figures. In a Twitter post on June 10, CZ argued that some third-party analytics platforms may skew the interpretation of exchange outflow data. He claimed that certain platforms consider any change in assets under management as “outflow,” which would include instances when cryptocurrency prices decline.

According to CZ, the actual outflow from the platform over the past 24 hours on June 9 was around $392 million, significantly lower than the $7 billion outflow recorded during the collapse of FTX last year in November. CZ further explained that during times of market volatility, large inflows, and outflows are not uncommon.

CZ’s remarks shed light on the complexities of interpreting exchange outflow data and caution against jumping to conclusions based solely on these figures. He pointed out that some analytics platforms focus solely on outflows, neglecting to consider inflows. On days with sharp price movements, such as the one mentioned, many arbitrage traders engage in substantial fund transfers between exchanges, often exponentially more than on regular days. These movements can skew the outflow data, giving a misleading impression of investor sentiment.

Since June 6, when the SEC targeted both Coinbase and Binance with regulatory actions, the overall cryptocurrency market has experienced a decline in market capitalization. According to CoinGecko, the market cap has dropped by 7%, representing a loss of over $80 billion. These developments highlight the significant impact regulatory actions can have on the crypto market, leading to increased volatility and prompting investors to reassess their positions.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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