- Panic around Binance reserve holding may not be necessary according to this analyst.
- CZ weighed in stating that things are beginning to stabilize and deposits are returning to Binance.
A lot of FUD (crypto market slang for fear, uncertainty, and doubt) has rocked the cryptocurrency market in recent weeks. The latest source of FUD concerns is Binance, the largest cryptocurrency exchange by trading volume.
Binance saw a sharp drop in its reserve balance amid concerns by users that the exchange may be the next crypto giant to run into financial troubles after FTX. The concerns began after Binance published its audited proof-of-reserve showing a less than 1:1 backing of its Bitcoin holdings.
However, market analysts are pointing out reasons for the panic to not continue. Ki Young Ju, the CEO, and co-founder of CryptoQuant, stated in a tweet that he considers Binance to be fine. His assessment is based on the fact that on-chain data does not show any shady activity.
Ju notes that the Bitcoin reserve of Binance dropped around 8% in the last 24 hours but is up 24% since the November FTX-induced market panic.
Comparing Binance’s stablecoin reserves with those of the pre-crash FTX, Ju also noted that, unlike Binance, FTX’s reserve fell 93 percent a few days before the bank run. At the time, the reserve did not look organic with many in/outflows related to non-FTX wallets.
Comparison of stablecoin reserves on Binance and FTX.
The FTX reserve doesn’t look organic with many in/outflows related to non-FTX wallets, and the reserve dropped -93% already, a few days before the bank run.
Disclaimer: I don’t have any relationship with Binance. pic.twitter.com/rf31glimb1
— Ki Young Ju (@ki_young_ju) December 13, 2022
BTC price surging despite Binance withdrawals spree
For its part, Binance has issued consistent communication to the crypto community to calm nerves. Binance CEO Changpeng Zhao said in a tweet that spikes in withdrawals, such as the current one, are not unusual at Binance.
According to CZ, withdrawals processed by Binance during the LUNA crash, as well as the FTX crash surpassed the latest volume. CZ adds that at present, things seem to have already stabilized and deposits are coming back in. The CEO previously admonished market participants to ignore the FUD and keep building.
Meanwhile, the withdrawal surge on Binance has coincided with a price rise in the Bitcoin market. In the last 24 hours, the benchmark crypto has gained 2.23 percent and is currently trading at around $17,810.
The price surge came on the back of a less-than-expected increase in the U.S. consumer price index (CPI). The inflation data released for November by the Bureau of Labour Statistics confirmed expectations by market participants that the Federal Open Market Committee (FOMC) will implement an about 0.5 basis points interest rate hike for December.