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Binance has processed 46% of Ethereum (ETH) and 27% of Bitcoin (BTC) outflows from CEXs.
According to CryptoQuant data, Binance had to process 2.96 million ETH of the 6.40 million in ETH withdrawn from CEXs and 136,000 BTC of the 496,000 in BTC sent off the platform.
This makes Binance the biggest liquidity provider as per current market conditions.
Asset withdrawals by investors can be attributed to long-term holding strategies. They include decentralized finance (DeFi), staking, cold storage solutions, etc.
Binance’s outflows on the scale seen here indicate that institutions are very active. They are gaining confidence that they can quickly make large transfers through Binance.
Investors Move Funds to Long-Term Storage and DeFi
The surge of outflows implies a change in broader investor behaviour towards long-term asset storage.
Such movements historically reduce market supply and are usually viewed as bullish moves.
Data on the chain reveals that many withdrawals are being forwarded towards self-custody, DeFi platforms, and staking solutions, as opposed to being pooled to be traded up immediately.
The transition is supported by features of Binance’s extensive ecosystem, such as BNB Chain and institutional custody.
Its infrastructure enables individuals to move assets from centralized to decentralized applications without major problems.
As such, this has made Binance the preferred gateway for large holders seeking to move their funds to private wallets or yield-generating platforms.
Binance Maintains Dominance Despite Market Volatility
However, despite market turbulence, Binance remains among the most popular exchange outflows.
The data charts show that BTC and ETH have steadily increased their withdrawals over the past year.
The withdrawal peaks correlate closely with major macroeconomic events. Charts show Binance’s increasingly larger share of ETH outflows.
These are also seen with BTC, but as its share of ISB outflows is much larger than BTC, it is not displayed.
Other charts showing history and peaks show that the amounts withdrawn for ETH and BTC have generally been higher than those deposited.
They have followed the general trend of Ethereum being more heavily used for staking goods and going into DeFi applications.
In addition, Binance’s carrying of these high-volume movements without channelling liquidity will strengthen its reputation as a vital player in the market.
As Binance and other assets are withdrawn to other exchanges (or simply off exchanges), the circulating supply of available assets for immediate trading is limited.
This can corral prices together and allow for stabilized or increased prices over time. Suppose traders and institutions begin to take assets from exchanges into private wallets or DeFi protocols.
In that case, it indicates growing confidence in the assets for the mid-to-long term.
On the other hand, despite regulatory brouhaha, Binance’s ability to hold onto an outflow market share also indicates that its users are high-net-worth individuals.
It also shows that institutional investors continue to trust it. Generally, the data supports the view that investors are shifting toward long-term holding strategies.
