Bitrabo Editorial
Recent on-chain data suggests that Binance, the popular cryptocurrency exchange, has been experiencing continuous Bitcoin outflows despite recent uncertainty surrounding the platform. This may cause some concern for investors.
Peak Bitcoin Outflows Recorded by Binance Reached 14,000 BTC
Only a few days ago, the Securities and Exchange Commission (SEC) of the United States sued Binance and its CEO Changpeng Zhao for alleged securities fraud. When exchanges face accusations like this, users may understandably become panicked about their investments. One way to gauge market reaction in a situation like this is to observe whether investors are withdrawing their assets from the exchange. The netflow indicator is a helpful tool for this purpose.
The Binance netflow metric measures the net amount of Bitcoin entering or leaving the exchange by calculating the difference between inflows and outflows. When the indicator is positive, it means that more coins are currently being deposited into the platform than withdrawn. In normal circumstances, investors tend to transfer their coins to an exchange for selling purposes, so such trends might have a bearish implication on prices.
However, negative values mean Binance is experiencing a net outflow. In normal cases, a continuous outflow can indicate accumulation by investors, which implies it could be bullish for the asset.
On-chain analytics firm Glassnode recently tweeted a chart showing the trend of Binance Bitcoin netflow values over the years and how it looked in recent times. According to the graph, Binance has experienced a deep negative spike in Bitcoin netflow. This means investors are currently withdrawing their assets from the exchange, which could be due to the widespread FUD in the market. Some of the outflows may have resulted from investors’ panic.
Glassnode also pointed out that the maximum netflow of 14,000 BTC seen in recent times marks the 8th highest spike in the metric’s history. Despite this, they claim that the scale of the withdrawals is still quite small when compared to Binance’s total reserve.
In the following chart, it is evident that Binance’s overall Bitcoin balance has barely moved due to these net outflows, as it remains 28,600 BTC off its all-time high value.
As per the data from Glassnode, the severity of the net outflows, when evaluated against the balance held on the Binance Exchange addresses, can be considered minimal.
Bitcoin (BTC) Price
The price of Bitcoin has suffered around a 2% loss in the last week, and it is currently trading at approximately $26,600.
BTC hasn't moved much in the last few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com