Binance’s Net Outflow Of $392 Million: Misleading Reports And The Bigger Picture

Key Points:

• Binance’s reported net outflow of $392m in 24 hours may not accurately reflect a decrease in assets under management.
• Reports of a sharp increase in Binance outflow may be misleading, as they often capture a short time frame and fail to consider inflows.
• Despite these reports, Binance’s exchange balance is actually on the rise and significantly higher than it was in December 2022.

Binance’s net outflow of $392m in 24 hours may not indicate a decrease in AUM. Reports of sharp increase in Binance outflow are misleading. The exchange balance is increasing and significantly higher compared to December 2022. Poor trading depth observed with BNB/USDC pair.

Recently, the CEO of Binance, Changpeng Zhao, tweeted that the company’s net outflow was approximately $392 million in the last 24 hours. However, he clarified that this number is not necessarily an indication of a decrease in assets under management (AUM) due to crypto price drops. In fact, some 3rd party analytics measure change in AUM in USD equivalent as outflow, which can be misleading. Additionally, some only measure outflow, not inflows, which can skew the data.

On days with sharp price movements, such as today, many arbitrage traders move a lot of funds between exchanges, which can result in significantly more outflows than on normal days. For reference, Binance processed $7 billion in net outflows in one day last November.

According to Spot On Chain, some reports only capture a short time frame, like a few days or a week, and give a quick conclusion that there is a sharp increase in Binance outflow. However, this is different from the bigger picture. As seen in the graph below, the exchange balance of Binance is on an increasing trend and is significantly higher compared to December 2022.

In addition, Wu Blockchain reported that the BNB/USDC trading pair BNB price on Binance briefly dropped to 57 USDC before quickly returning, indicating poor trading depth for that pair. Similar situations have occurred with other trading pairs on Binance before.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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