Nearly $400 million has been withdrawn from Binance in the last 24 hours

By Melanie M. On Jun 11, 2023

“Crypto” Summit between Milei and Bukele: What do the…

AGUINALDO AND SALARY: Why are more and more Argentine companies…

Navigating the turbulent seas of cryptocurrencies, trading platforms like Binance are met with daily waves of change. Binance, a forerunner in the global cryptocurrency exchange arena, recently posted a net outflow of around $392 million in just one day. However, this figure might not be as alarming as it initially seems.

According to our data, last 24 hours, @Binance net outflow is about $392m.
Our wallet addresses are public. Some 3rd party analytics measure Change in AUM (asset under management) in USD equivalent as outflow. This would include crypto price drops (which decrease AUM) as “outflow”.…
— CZ 🔶 Binance (@cz_binance) June 10, 2023

Binance CEO Changpeng Zhao reportedly clarified this data in a series of tweets. He noted that net outflows do not tell the whole picture. More precisely, he claimed that Binance wallet addresses are public and that some external analyzes confuse the change in assets under management (AUM) with an outflow of funds.

This error is caused by measuring the drop in cryptocurrency prices, which decreases the AUM, and marking it as an “exit”. Therefore, it is crucial to understand the difference between these two separate phenomena.

Market volatility and the role of arbitrage operators

In addition to clarifying net outflows, CZ delved into market dynamics during wild price movements. He noted that these circumstances lead arbitrage operators to move substantial funds between exchanges. Consequently, the volume of funds transferred on these days is exponentially higher than on average trading days.

In the same vein, he compared the current outflow to the staggering $7 billion net outflow processed by Binance in a single day last November. However, CZ clarified that it is essential to consider both inputs and outputs to get a balanced understanding of market activity.

In conclusion, understanding the dynamics of cryptocurrency exchanges requires an insight into the different facets of the movement of funds. Furthermore, it is crucial to distinguish between genuine outflows and devaluation of assets due to market volatility.

Additionally, the role of arbitrage traders during price changes adds another level of complexity to these financial maneuvers. Therefore, as the cryptocurrency market continues to evolve, our understanding and interpretation of its behavior must also evolve.