In recent days, there has been a noticeable increase in the outflow of crypto assets from centralized exchanges, in particular from Binance, one of the largest cryptocurrency exchanges in the world. This trend is noted by leading analytics platforms such as Nansen and DeFiLlama, which recorded a significant outflow of funds from Binance after news of a lawsuit filed by the US Securities and Exchange Commission (SEC) against the exchange.
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Nansen data shows that over the past seven days, there has been a net outflow of $2.36 billion from Binance, and another $123.7 million has been withdrawn from Binance.US, the US subsidiary of Binance. Similarly, DeFiLlama reported an even higher figure of $3.35 billion outflow from Binance.
Binance CEO Responds to Churn Rumors
However, CEO Changpeng Zhao, commonly known as CZ, offered a different perspective on these churn numbers. In a June 10 post, CZ argued that some third-party analytics platforms could misinterpret the exchange’s churn data. He claims that some platforms treat any change in assets under management as an “outflow,” which includes instances where cryptocurrency prices decline.
According to CZ, actual outflow from the platform in the last 24 hours on June 9 was about $392 million, well below the $7 billion outflow recorded during last year’s FTX crash in November. CZ also explained that large inflows and outflows are not unusual during market volatility.
CZ’s remarks shed light on the difficulty of interpreting the FX outflow data and caution against jumping to conclusions based solely on these numbers. He pointed out that some analytics platforms focus exclusively on outflows, neglecting inflows. On spike days, many arbitrage traders make significant transfers of funds between exchanges, often exponentially more than on normal days. These movements can skew data on outflows, creating a false impression of investor sentiment.
Since June 6, when the Securities and Exchange Commission targeted Coinbase and Binance, the overall cryptocurrency market has experienced a decline in market capitalization. According to CoinGecko, the market capitalization has fallen by 7%, or more than $80 billion. These developments underline the significant impact of regulatory measures on the cryptocurrency market, which leads to increased volatility and encourages investors to re-evaluate their positions.