Panic around Binance is most likely exaggerated, but at the same time it has real consequences
The last thing the cryptocurrency market needed was the potential implosion of the biggest exchange on the market. However, the FUD around Binance might not be as bad as some portray it, and the previously prevailing wave of outflows might be an important factor in its stability.
Dogecoin back at support
Dogecoin’s battle with the market has not ended yet; the meme coin has been successfully moving upward for the last two months but returned to the trendline support level by the end of the year. Unfortunately, this is not a good sign.
The aforementioned trendline should not be considered a potentially strong reversal point, as it does not have any volume-side support behind it or a large concentration of buy orders. Luckily, the sharp bounce that occurred immediately after the meme coin reached the support level.
As for now, Dogecoin is not yet breaking it but at the same time losing more than 0.5% of its value in the last 24 hours.
BNB’s 18% price plunge
As soon as the investigation report hit the cryptocurrency market, the price of Binance’s underlying token plummeted by over 5% as investors started to sell their BNB holdings in a panic, causing the first wave of losses.
Shortly after, the $2 billion bankrun started: traders had been rapidly closing their positions and moving stablecoins away from the trading platform despite the lack of factors that should have urged them to do so.
However, the $2 billion withdrawal wave revealed the resilience of the exchange in contrast to FTX that tumbled down after only a $1 billion outflow wave. However, there are some things to worry about.
In his recent tweet, Changpeng Zhao announced the exchange’s inability to cover increased USDC withdrawals following a spike in demand for USDC. However, the most likely reason behind it should not be tied to the lack of reserves on the exchange. Rebalancing and funds redistribution would be more likely reasons behind the paused withdrawals.
As for now, the outflow pace from the exchange does not look elevated and returned to average. However, almost any news might spark another bankrun which, however, Binance should be able handle, considering having almost $15 billion of liquid reserves available out of a $60 billion portfolio.
Ethereum’s another breakout attempt
The second biggest cryptocurrency on the market saw a rapid spike in the percentage of whale-tier transactions on the network. Considering the lack of price action and relative calmness on the network, such a strong rise in the number of large transactions is most likely tied to Binance’s bankrun.
Previously, we highlighted how the low burn rate on the netowrk leads to dull price performance. For almost two weeks now, Ethereum has been trying to break out of the local resistance level and yet failing to do so because of the lack of traction on the network.