Binance Outflows Misinterpreted: Analyzing Data Amid SEC Lawsuits & Market Volatility

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

However, in a June 10 Twitter post, Changpeng Zhao 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.

Zhao 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.

Large inflows and outflows are perfectly normal during times of volatility, Zhao explained. Many arbitrage traders move a lot of funds between exchanges, usually exponentially more than on normal days.

Since June 6, when the SEC unleashed its attacks on both Coinbase and Binance, crypto market capitalization has declined by 7%, or more than $80 billion. On June 9, it was reported that decentralized finance (DeFi) volumes surged more than 400% following the twin lawsuits targeting centralized exchanges.

The challenging regulatory environment surrounding centralized exchanges has led to significant outflows and market capitalization declines. These numbers can be alarming, and they have generated intense discussion within the crypto community.

However, as Zhao points out, it’s essential to consider the context in which these outflows are occurring. Volatility in the crypto market can lead to large fund movements between exchanges, and a more nuanced understanding of the situation is necessary. While regulatory challenges continue to drive uncertainty, it’s crucial to maintain perspective on the current state of the market and remain aware of the broader trends shaping the future of cryptocurrencies and blockchain technology.

Source: Cointelegraph

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