Bitcoin Withdrawals Continue on Binance Exchange: Should Investors be Worried?

• The SEC has sued cryptocurrency exchange Binance and its CEO Changpeng Zhao for alleged securities fraud.
• When there is such uncertainty about an exchange, users of the platform can naturally panic.
• One way to measure market reaction around FUD is to check whether investors are withdrawing their money from the exchange.

Following the SEC’s lawsuit against Binance exchange and CEO CZ, thousands of BTC withdrawals were observed from the platform.

14,000 BTC Bitcoin Withdrawal Observed on Binance

Just a few days ago, the US Securities and Exchange Commission (SEC) sued cryptocurrency exchange Binance and its CEO Changpeng Zhao for alleged securities fraud.

When there is such uncertainty about an exchange, users of the platform can naturally panic. One way to measure market reaction around FUD is to check whether investors are withdrawing their money from the exchange. The net flow indicator can provide a good service for this purpose.

“Binance net flow” is a metric that measures the net amount of Bitcoin entering or leaving the cryptocurrency exchange. The indicator value is simply calculated as the difference between inputs and outputs.

When the value of this metric is positive, it means that currently, inputs are exceeding outputs and therefore coins are being deposited onto the platform in a clear manner. One of the main reasons for an investor to transfer their coins to exchanges is for selling purposes, and such a trend creates a downward trend for the price.

On the other hand, negative values mean that Binance is currently observing a net BTC outflow. Under normal conditions, such a trend can be a sign of coin holders accumulating and therefore can be a positive sign for the asset’s value.

The following chart shows how the values of the indicator have looked recently and also how they compare to values observed in the past few years:

From the above chart, it can be seen that Binance Bitcoin net flow has recently recorded a deep negative drop. This means that investors are withdrawing coins from the platform.

As mentioned above, the values of this metric can be signs of accumulation, and this situation can be positive for the price. However, since these withdrawals occurred after a FUD (fear, uncertainty, and doubt) explosion in the market, it is likely that at least some of them were due to investor panic withdrawals.

Although Glassnode notes that the scale of these withdrawal transactions is still very small compared to the platform’s total reserves, the observed net flow of 14,000 BTC is the 8th largest net flow increase in the metric’s history.

The following chart shows that Binance’s total Bitcoin balance has hardly moved due to these net outflows, as it is still only 28,600 BTC away from its all-time high value.

Bitcoin Balance on Binance Exchange