Relatively low realization of profits and losses, coupled with a tangible lack of reaction from holders, points to investor apathy toward the SEC‘s lawsuits againstBinance andCoinbase. Glassnode arrived at this conclusion.
For more information SEC charges against #Binance and #Coinbase and subsequent response of market particpants, please visit the latest Week On-Chain??https://t.co/EQBG3eUk85 pic.twitter.com/WJMvgGkPS3
— glassnode (@glassnode) June 13, 2023
On June 5, the SEC filed a case against Binance and its CEO Changpeng Zhao. The agency brought 13 charges, including allegations of selling unregistered securities.
Subsequently reports emerged that the Commission’s allegations were analogous to the charges against the failed crypto exchange FTX and its subsidiary Alameda Research.
On June 6, the SEC filed suit against the Coinbase exchange. The regulator also alleges that the platform violated securities laws.
The chart below shows a decline in Binance’s stablecoin balances of $1.6 billion (about 20%) over the past seven days, and more modest outflows of Bitcoin and Ethereum from the platform (5.7% and 7.1%, respectively).
In absolute terms, market reaction did not shake Binance’s position as one of the largest holders of the first and second by market capitalization cryptocurrencies.
The decline in stablecoin balances began back in November 2022 after the SEC’s allegations against BUSD. Since then the metric has fallen 75%, to $6.5 billion.
For Coinbase, reserve changes were less dramatic — stablecoin balances essentially unchanged, Bitcoin balances fell by 2,300 BTC (~0.5%). The same cannot be said for Ethereum — clients withdrew 291 000 ETH (~8%).
This can be linked to the fact that the offered staking services were criticised, — explained the experts.
An analysis of deposits/withdrawals of funds in Bitcoin on the platforms showed the following:
- for transactions under $10 million, there was a persistent outflow — a net daily outflow of more than $130 million persisted all week;
- for trades over $10 million, daily inflow rates varied from $15 million to $30 million.
Very large organisations (such as institutions) are more susceptible to SEC news than smaller ones, — the experts noted.
The chart below showed flows rising roughly 70%, to $845 million.
Total withdrawals exceeded deposits by about 10%. Non-custodial storage of assets remains investors’ preferred strategy. A similar dynamic was observed after the FTX collapse, — analysts noted.
By analysing Bitcoin deposits by investor type, researchers found that speculators accounted for 76.4% of the total, while hodlers accounted for less than 2%. Another 21.7% consisted of intra-bourse transfers.
The first group historically accounted for 60% of inflows. In other words, last week it was more active than at other times, the experts said.
The diagram below confirms the earlier conclusion: the group of short-term investors directed 0.93% of the held balance to exchanges. The figure did not exceed the 1% threshold typical of episodes of high volatility, though it marked a noticeable spike compared with the baseline level of the 2021–2022 cycle.
Long-term holders were “surprisingly calm”, not showing any notable reaction to the news, the experts noted.
The inflows to exchanges of their coins amounted to only 0.004% of the total balance. In 66% of all other trading days in the historical retrospective, a larger relative inflow was observed, the experts calculated.
Aggregate realized profits and losses over the last seven days were relatively small. In this flow, most were purchased at prices close to the current price.
This indicates both a degree of confidence (investors, on balance, are not shaken by the news) and apathy (the current price range is not a sufficient incentive to spend), — the experts concluded.
Earlier, the founder of Mott Capital Management, Michael Kramer, suggested that the price of the leading cryptocurrency to around $20,000.
Earlier, former Chairman of the U.S. Commodity Futures Trading Commission, stated, that the future of digital assets depends on the outcomes of the SEC’s lawsuits against Binance and Coinbase.