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Binance CEO CZ responds as data points to billions in exchange outflows

June 12, 2023 Coin Telegraph

Balances

Data analytics platforms have reported billions of dollars in outflows from Binance over the last week, but this can be misinterpreted, argues Changpeng Zhao.

While data suggests that crypto assets have been flowing out of centralized exchanges at an accelerated pace over the last week, Binance CEO Changpeng Zhao argues it may not be as bad as it appears.

Leading analytics platforms such as Nansen and DefiLlama have all measured increased exchange outflows from Binance over the past seven days after news of the Securities and Exchange Commission’s lawsuit against the firm hit the airwaves.

According to Nansen, there has been a net outflow of $2.36 billion from Binance over the past seven days, along with $123.7 million flowing out of Binance.US.

DefiLlama reported an even larger figure of $3.35 billion in outflows from Binance, while Glassnode data shows the exchange’s BTC balance having declined by 5.7% or around $1 billion over the past seven days.

However, in a June 10 Twitter post, CZ argued that some exchange outflow data can be skewed as some third-party analytics measure change in assets under management as “outflow,” which would include times when crypto prices decline.

According to our data, last 24hrs, @Binance net outflow is about $392m.

Our wallet addresses are public. Some 3rd party analytics measure Change in AUM (asset under management) in USD equivalent as outflow. This would include crypto price drops (which decrease AUM) as "outflow".…
— CZ Binance (@cz_binance) June 10, 2023

CZ instead claimed the firm’s outflow over the past 24 hours on June 9 was around $392 million, which pales in comparison to the $7 billion in one-day outflow that was recorded last year in November, around the time of FTX’s collapse.

CZ continued to explain that large inflows and outflows are perfectly normal during times of volatility.

“Some even only measure outflow, not inflows. On a sharp price movement day like today, many arbitrage traders move a lot of funds between exchanges, usually exponentially more than on normal days.”

Since the SEC’s lawsuits against Binance and Coinbase on June 5 and 6, the total crypto market capitalization has declined by 7%, or more than $80 billion, according to CoinGecko.

On June 9, Cointelegraph reported that decentralized finance volumes surged more than 400% following the twin lawsuits targeting thecentralized exchanges.

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Crypto users turned to DEXs, loaded up on USDC after Silicon Valley Bank crash

March 17, 2023 Coin Telegraph

CEX

The collapse of FTX led to a similar exodus from centralized exchanges, as users worried they may lose access to funds during crises.

The collapse of Silicon Valley Bank saw investors loading their bags with USD Coin (USDC), along with an exodus of funds from centralized exchanges (CEXs) to decentralized exchanges (DEXs).

Outflows from centralized exchanges often spike when the markets are in turmoil, blockchain analysis firm Chainalysis said in a March 16 blog post, as users are likely worried about losing access to their funds when exchanges go down.

*Funds sent from CEXs to DEXs following SVB’s collapse. Source: Chainalysis.*

The Chainalysis data shows that hourly outflows from CEXs to DEXs spiked to over $300 million on March 11, soon after SVB was shut down by a Californiaregulator.

A similar phenomenon was observed during the collapse of cryptocurrency exchange FTX last year, amid fears that the contagion could spread to other crypto firms.

However, data from the blockchain analytics platform Token Terminal suggests that the surge in daily trading volumes for large DEXs was short-lived in both cases.

*Daily trading volumes for large DEXs from September to March. Source:* *Token Terminal*

USDC was identified as one of the top assets being moved to DEXs, which Chainalysis said was unsurprising given that USDC depegged after stablecoin issuer Circle announced it had $3.3 billion in reserves stuck on SVB, prompting many CEXs like Coinbase to temporarily halt USDC trading.

What was surprising, Chainalysis noted, was the surge in USDC acquisitions on large DEXs such as Curve3pool and Uniswap. “Several assets saw large spikes in user acquisition, but none more than USDC,” the blockchain analysis firm wrote.

*Token acquisitions on Uniswap from March 7 to March 14. Source: Chainalysis*

Chainalysis theorized that this was due to confidence in the stablecoin, with some crypto users loading up on USDC while it was relatively cheap and betting that it would regain its peg — which it did on March 13 according to CoinMarketCap.

*USDC’s brief depeg from March 11 to March 13. Source: CoinMarketCap*

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Exchange outflows hit historic highs as Bitcoin investors self-custody

November 14, 2022 Coin Telegraph

Bitcoin

Confidence in centralized exchanges appears to be waning as Bitcoin flows into self-custody wallets at near-record levels.

Bitcoin (BTC) investors have been increasingly moving their holdings to self-custody solutions following the collapse of the world’s second-largest crypto exchange last week.

On-chain exchange flow data is showing a surge in withdrawals to self-custody wallets, according to analytics provider Glassnode.

In a Nov. 13 post on Twitter, Glassnode reported that Bitcoin exchange outflows had hit near historic levels of 106,000 BTC per month.

It added that this has happened only three other times — in April 2022 and November 2020, as well as in June/July 2022. It also reported that the number of Bitcoin wallets receiving the asset from exchange addresses surged to around 90,000 on Nov. 9.

Following the collapse of FTX, #Bitcoin investors have been withdrawing coins to self-custody at a historic rate of 106k $BTC/month.

This compares with only three other times:
- Apr 2020
- Nov 2020
- June-July 2022https://t.co/92aYVYU4Yt pic.twitter.com/em7CsDBWUf
— glassnode (@glassnode) November 13, 2022

Exchange outflows are usually a bullish sign that BTC is being hodled for the long term. However, in this scenario, it appears to be the result of loundering confidence in centralized crypto exchanges.

Glassnode commented that outflows have resulted in “positive balance changes across all wallet cohorts, from shrimp to whales,” before adding:

“The failure of FTX has created a very distinct change in #Bitcoin holder behavior across all cohorts.”

Since Nov. 6, when the FTX fiasco began, balance changes have increased across all BTC wallet sizes with “shrimps” that have less than one coin increasing by 33,700 BTC. Whale wallets with more than 1,000 coins have seen an increase of 3,600 BTC indicating that the self-custodian push is happening across the board.

Industry leaders are now starting to advocate self-custody solutions as the phrase “not your keys, not your coins” bears more weight than ever before.

On Nov. 13, Ethereum educator Anthony Sassano said that crypto holders shouldn’t be storing their assets on centralized exchanges unless their actively trading large amounts.

MicroStrategy’s Michael Saylor told Cointelegraph in an interview that self-custody prevents centralized third parties from abusing their power.

Glassnode also reported that stablecoins, many of which destabilized last week, have been flowing onto exchanges at increased rates over the past week.

Nov. 10 saw more than $1 billion in stablecoins arriving on centralized exchanges. The total stablecoin reserve across all exchanges it tracks reached a new all-time high of $41.2 billion, it added.

“The echos of the FTX collapse will likely act to reshape the industry across many sectors, and shift the dominance, and preference for trustless vs centrally issued assets,” it concluded.

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outflows

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