- Binance reports significant daily inflows.
- The news comes after the market crash.
- Other figures put this reporting in context.
Centralized exchanges often face criticism for the lack of transparency in their financial reporting. Critics argue that exchanges present the numbers in a way that looks best for them.
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Recently, Binance CEO Richard Teng highlighted a daily inflow of $1.2 billion as one of the highest single-day inflows for the exchange this year. This claim, however, comes on the heels of an even bigger outflow following the recent market crash.
Binanceโs $1.2 Billion Daily Inflows Come With Major Caveat
Binanceโs high reported inflows are not exactly what they seem. On Wednesday, August 6, Binance CEO Richard Teng highlighted a net inflow of $1.2 billion, marking it as one of the highest single-day inflows for the exchange this year. This announcement was intended to signal strong investor confidence amidst a volatile market.
Still, data from DefiLlama reveals a different aspect of the story. On August 5, just the day before, Binance experienced significant outflows amounting to $2.2 billion. This massive withdrawal of funds was a reaction to a market crash that triggered widespread panic among investors.
Moreover, it is important to note that inflows and outflows indicate a transfer of assets into and out of the exchange at their market price. As asset prices were lower on August 5, the outflow of $2.27 billion represents an even greater amount of BTC, ETH, and other cryptos relative to the net inflows on the next day.
August Crypto Crash Causes Shift in Investor Behavior
The cryptocurrency market experienced a significant crash on August 5, resulting in a loss of over $750 billion in market value. During this period, Bitcoin fell below $50,000, a drop of nearly 20%. While the total crypto market cap and Bitcoin somewhat recovered, prices are still below what they were before the crash.
During market downturns or uncertainty, investors often move their funds off exchanges to protect their assets from potential losses. This involves swapping their assets for fiat currency and cashing out or moving them from exchanges to hard wallets. Investors do the latter to protect themselves from exchange failure, a greater risk in bear markets.
As the recovery from the August 2024 crash came swiftly, many investors felt confident enough to move their assets back to centralized exchanges. This is likely why Binance saw a significant daily inflow after the crash.
On the Flipside
- Market declines create for all centralized entities in crypto. For instance, crypto downturns caused the cascading fall of Terra-Luna, Celsius, and FTX.
- Other exchanges, including OKX and Bybit, also saw significant outflows during the latest market crash.
Why This Matters
The large outflows after the latest market crash add important context to the figures reported by Binanceโs CEO. Without this fact, traders would not have gotten a whole picture of the situation unfolding.
Read more about Binanceโs troubles in India:ย
India Fines Binance for Unpaid Goods and Services Tax Totaling $86M
Read more about Binanceโs performance in its Proof of Reserves report:ย
Binance Reserves See Net Inflow of $3.27B According to Latest Report
