The CEO of on-chain analysis firm CryptoQuant examined the holdings of the largest exchange to see whether it is financially stable, robust and prepared for another significant wave of withdrawals. These are the outcomes.
The on-chain expert claims that despite the recent decline in Bitcoin reserves, Binance’s holdings have grown by 24% since the FTX bank run last month. The flood of Ethereum withdrawals that have been seen since November does not appear to be having a substantial impact on the exchange’s reserves according to him. On the contrary, there is increasingly more ETH in the exchange’s wallets.
The same situation holds true for Bitcoin ownership. The fact that Binance has not been obliged to sell part of its liquid assets in exchange for liquidity is reflected in the fact that the volumes of digital gold on exchanges are at acceptable levels. Although Nansen’s portfolio estimates that Binance’s portfolio is worth about $60 billion, this does not guarantee that the exchange would be able to handle an unexpected $60 billion surge in withdrawals.
Approximately $20 billion is still retained in liquid assets that may be used in an emergency and are stored on an exchange. With about $2 billion in withdrawals, Binance shouldn’t see any significant pressure from investors that would impair withdrawal processes or the exchange’s operational readiness.
The FUD surrounding Binance
CryptoQuant’s CEO press release was driven by the ongoing FUD surrounding Binance which needed immediate addressing. Some have questioned the stability of cryptocurrency exchange Binance by criticizing its most recent proof-of-reserves report and citing recent withdrawals, but the company has retaliated against this “FUD.”
Tuesday morning, the blockchain analytics company Nansen said that over the previous week, Binance had lost $2.2 billion worth of ether. According to the company, the majority of daily net withdrawals, or $1.9 billion, took place over the previous 24 hours.
For instance, broker Jump Trading just withdrew $146 million from Binance. Several unidentified organizations also made sizable withdrawals. Requests for comment from various outlets were not immediately responded to by Jump Trading. According to Andrew Thurman, a researcher at Nansen, these withdrawals showed “some user skittishness,” and it was “no doubt upsetting for some people” to see, he added. However, despite his remarks the amounts of withdrawals still seem to leave a question of doubt on many users.