Data analytics firm CryptoQuant detected a massive Bitcoin outflow from the US-based cryptocurrency exchange Coinbase just as the digital asset experienced a major sell-off.
The South Korean portal reported about 12,380 bitcoin units worth more than $575 million leaving Coinbase late night Thursday. The assets made way into the exchange’s custody wallets, which, as CryptoQuant noted, represents addresses that have associations with an over-the-counter bitcoin trading service.
Ki-Young Ju, the chief executive officer at CryptoQuant, treated the outflow as his metric to gauge a booming institutional interest in the Bitcoin market. He noted that established investors purchased the cryptocurrency when it had dropped to $48,000 following a steeper sell-off on Thursday. Later, they transferred their tokens to Coinbase Custody wallets.
Big Announcement Ahead? The History Says So
The cryptocurrency market interprets major exchange outflows as bullish for the underlying asset. When traders withdraw their tokens from a trading platform, it shows their intention to hold instead of trading the concerned asset for another one. That also decreases token’s liquidity on exchanges, leading to a price spike should its demand grows higher.
CryptoQuant data shows that the latest spikes in Bitcoin outflows from Coinbase led to a higher price for the cryptocurrency. For instance, the BTC/USD exchange rate rose from $28,000 to as high as $58,367 on Coinbase after the exchange reported two massive BTC withdrawals on January 31 and February 7.
Each outflow also coincided with a big institution announcing its entry into the Bitcoin sector. For instance, the withdrawal on February 7 followed Tesla’s revelation that it had purchased $1.5 billion worth of BTC in January. That prompted Mr. Ju to see a broader institutional activity as the bitcoin outflow surged on February 25.
“This is the strongest bullish signal I’ve ever seen,” he noted.
The question remained: who/what deposited about $575 million into Coinbase’s custodial wallets? A big corporate, a hedge fund, or an individual investor. The jury on this is still out in the open.
Macro Pressure on Bitcoin
Mr. Ju recognized the recent sell-off in the Bitcoin market appeared due to psychological pressure built by rising government bond yields in the US. Nonetheless, none of the on-chain indicators showed a bearish sentiment brewing in the market.
In retrospect, the yields on the five-year and 10-year Treasury notes surged in the late Thursday, and early Friday session after Labor Department data showed a slowdown in the number of Americans filing for jobless benefits last week. That led many investors to see the Federal Reserve increasing its benchmark rates shortly, given its commitment to tapering its dovish policies only if it seems a substantial recovery in the jobs market.
Bitcoin sailed almost 1,200 percent high from the depth of its coronavirus pandemic lows as investors hunted for returns after the US central bank stimulus depressed interest rates to near-zero. But with the prospect of rate hikes, the cryptocurrency started shedding its profits.
“I think the major reason for this drop is the jittering macro environment like the 10-year Treasury note, not whale deposits, miner selling, and lack of institutional demand,” noted Mr. Ju nonetheless.
Legendary Trader Peter Brandt Challenges Binance with Four Questions about 88% BTC Crash
Here’s what is unclear for Mr. Brandt about mysterious Bitcoin (BTC) flash-crash of Oct. 21, 2021
Prominent trader and analyst Peter Brandt has taken to Twitter to ask his four questions in the context of the flagship crypto’s 88% dropdown.
What do Binance and Binance.US have in common?
First of all, Mr. Brandt challenged the character of corporate relationships between Binance and Binance.US, its unit focused on American markets.
1. What is exact corp. relationship @binance w/ @BinanceUS
2. Will firm release T&S with all trades/volume/price?
3. Did firm take opposite side of client fills
4. Will firm change low to reflect actual fills
cc: @GaryGensler @CFTC @SECGov @cz_binance @IBKR pic.twitter.com/huqzZbSGIt— Peter Brandt (@PeterLBrandt) October 24, 2021
Also, Mr. Brandt asks whether Binance is planning to release detailed documents to specify statistics for trades, their volume and prices during the flash-crash.
Then, the trading legend asked about the role of the platform in taking the opposite side of a client fills.
Besides the Binance CEO and co-founder Changpeng “CZ” Zhao, Mr. Brandt mentioned the Interactive Brokers platform, U.S. watchdogs CFTC and SEC and Gary Gensler, the SEC chairman.
Most expensive “trading algorithm bug” ever?
Also, Mr. Brandt attached a screenshot of a tweet by CZ when Binance’s boss warned his audience about expected volatility spikes across cryptocurrency markets.
Finally, Mr. Brandt added that he never used Binance for trading.
As covered by U.Today previously, on Oct. 21, 2021, amidst a spending rally, the Bitcoin (BTC) price briefly tanked to the $8,000 level, losing more than 88% in no time.
A similar flash-crash was registered on 26 other low-liquidity exchanges. A Binance.US representative attributed this dramatic plunge to a critical bug in third-party mechanisms by one of the platform’s sophisticated institutional clients.
Crypto investments a financial backup for Facebook whistleblower
Haugen worked as a Facebook product manager before accusing the company of spreading controversial and insensitive misinformation. She allegedly possesses numerous confidential research documents, which, according to her, shows that “Facebook prioritizes profit over the well-being of children and all users.” Previously, Facebook has been accused of influencing the 2016 United States presidential election with the help of Russian agencies.
In a follow-up interview with The New York Times, Haugen was asked about her financial situation:
“For the foreseeable future, I’m fine, because I did buy crypto at the right time.”
The whistleblower also received financial help from nonprofit organizations (NPO) backed by Pierre Omidyar, a co-founder of eBay. However, Haugen clarified that Omidyar’s NPO fundings were only used to finance travel and related expenses.
According to Haugen, shifting to Puerto Rico helped her join her “crypto friends” who enjoy capital tax exemptions on Bitcoin (BTC) and cryptocurrency assets.
Iconic whistleblower and former U.S. Central Intelligence Agency agent Edward Snowden also continues to show support for the Bitcoin economy amid regulatory pressures from governments across the world.
On Oct. 4, Snowden tweeted about Bitcoin’s tenfold growth despite China’s blanket ban on crypto mining and trading.
Sometimes I think back to this and wonder how many people bought #Bitcoin then.
It's up ~10x since, despite a coordinated global campaign by governments to undermine public understanding of—and support for—cryptocurrency.
China even banned it, but it just made Bitcoin stronger. https://t.co/pbnOFGfaVf— Edward Snowden (@Snowden) October 3, 2021
Binance Bitcoin Balances Are Draining: 40,000 BTC Moved Away from Biggest Crypto Exchange
According to CryptoQuant data, Binance cryptocurrency exchange once again faced a massive fund outflow totaling 38,246 BTC. After a significant drop in the Bitcoin balance, the total balance on the sheets is close to 500,000.
In-house redistribution of funds
Previously, Binance.US faced a major bug that led to so-called “slippage”—the difference between the expected price of a trade and the actual execution of an order.
Whenever the order book on the market is too thin and an exchange cannot provide enough liquidity, volatility on the asset tends to rise exponentially, which leads to a massive drop in value.
Due to the bug that appeared, the price of Bitcoin on Binance.US has dropped to $8,000, with numerous buy orders being executed on the way down. In order to provide more liquidity to the market on Binance.US, the main platform could have moved some of its funds to the U.S.-targeted platform, which is being counted by on-chain metrics as “outflows.”
With Bitcoin moving past the previous ATH and trading volumes remaining stable, some traders and investors are choosing to move their funds away from exchanges and keep them in their wallets.
According to volume metrics, no significant selling pressure has been present on centralized exchanges, along with no abnormal trading activities.
Previously, notable exchange inflows appeared back in May, when Bitcoin’s price retraced from the previous ATH to $29,000. Most retail investors have moved funds from their wallets to the exchanges to take profit.