The US Securities and Exchange Commission (SEC) sued Binance for alleged fraud on June 5, which made the Bitcoin and other digital currencies market volatile, and users started withdrawing their reserves. The next day, Coinbase also became a target of regulatory authority in the US, causing both major players in the industry to suffer regulatory scrutiny in quick succession.
Whenever centralized entities such as Binance and Coinbase undergo regulatory pressure, users become panicked and tend to withdraw their reserves from the exchanges. Glassnode, the on-chain analytics firm, has analyzed how the balances of the main cryptocurrencies have changed on Binance and Coinbase and how their users have coped up with the current environment.
Binance and Coinbase Reserve Balance
Glassnode has reported that since the SEC filed its charges, all three reserves of Bitcoin, Ethereum, and stablecoins on Binance have seen a decline. Among them, the stablecoins (USDC, USDT, and BUSD) have recorded a sharp decline of nearly $1.7 billion, accounting for 20.9% of the total reserve on the exchange. Although Bitcoin and Ethereum have seen minor losses of 5.7% and 7.1%, respectively, the plunge is still notable.
Interestingly, although Binance witnessed such significant net outflows following regulatory pressure, Coinbase’s reserves remained relatively steady. According to Glassnode, “This suggests a more pronounced investor response, perhaps related to the offered staking services coming under fire.”
The chart indicates that the reserve for Bitcoin on Coinbase fell by 0.5% of the entire exchange balance, while the stablecoin USDC, USDT, and BUSD’s overall value remained constant over the past week. The Ethereum reserve registered an 8% drop, indicating a more pronounced investor response.
Overall, it appears that there has been a more drastic user response on Binance than on Coinbase, where users other than Ethereum investors remain relatively calm.
Bitcoin Price
At the moment, Bitcoin’s value is about $26,000, with a 1% increase in the previous week but has not moved much.
Featured image from iStock.com, charts from TradingView.com, Glassnode.com
