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Binance Coin (BNB), the native token of the world’s largest digital-asset trading platform, Binance Holdings, has snapped a prolonged slide that was partially sparked by concerns about outflows from the exchange. BNB is up about 4% in the past two days, ending a seven-day losing streak that was the longest since October. In contrast, Bitcoin and a gauge of the top 100 tokens have remained steady over the past few days.
BNB could be seen as a barometer of sentiment towards Binance. The platform experienced $6 billion in net withdrawals over three days last week, likely due to a general lack of confidence in the cryptocurrency market following the bankruptcy of rival exchange FTX and allegations of fraud against its founder, Sam Bankman-Fried.
A Binance spokesperson declined to comment on BNB price movements, but reiterated that the exchange passed a stress test by fulfilling recent withdrawals, which should offer “extraordinary comfort” that funds are secure. Cici Lu, CEO of crypto consultancy Venn Link Partners, commented that there was “a lot of FUD about Binance last week,” likely referring to fear, uncertainty, and doubt. Lu added that “the market is in ‘shoot first and ask questions later’ mode, but perhaps the selling is overdone – for now.”
Data from CryptoQuant shows that there was a net inflow of 338 Bitcoins to Binance on Sunday, compared to a record net daily efflux of over 40,000 on December 13th. Net outflows of Ether slowed to 1,183 tokens on Sunday, compared to a net exit of over 278,000 last Tuesday.
Binance and some other digital-asset exchanges had engaged accounting firm Mazars Group to work on reports that were meant to demonstrate that the companies had the necessary reserves to cover a surge in withdrawals. However, Mazars suspended work for these crypto firms last week due to a lack of reassurance from “proof-of-reserves” reports published so far and intense media scrutiny. Binance stated that it embraces additional transparency and is searching for a large accounting firm that is willing to work on such reports.
CEO Changpeng Zhao has been defending the exchange’s position, stating in a tweet on Sunday that “we are still hiring,” with a link to a post from June that announced Binance was hiring for 2,000 open positions. In a previous tweet, Zhao had also stated that “FUD is temporary.” Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors, stated in a note on Friday that it is likely that Binance is solvent and has customer assets fully backed. However, Farrell also mentioned that there is “a non-zero chance” of Binance going “belly-up in the instance of a complete bank run,” and advised customers to remove all funds from the exchange to easily mitigate any risk of asset loss or seizure.
As of 2:10 PM in Singapore on Monday, BNB was trading at around $247. The token has dropped 9% in the past month, while Bitcoin has remained relatively stable. Despite this recent dip, BNB has seen a staggering increase of over 1,600% in the past three years, compared to Bitcoin’s 133% gain.
It seems that concerns about outflows from Binance have subsided, leading to a recovery in BNB’s price. While the cryptocurrency market can be unpredictable, the exchange’s stress test and CEO’s efforts to defend the company’s position may have contributed to this shift in sentiment. However, it remains important for investors to conduct their own due diligence and assess the risks before making any investment decisions.