The total amount of bitcoin (BTC) held in Binance’s wallets has increased sharply in the past four weeks, reversing the outflow that followed the collapse of crypto exchange FTX in November.
Data tracked by blockchain analytics firm Glassnode shows the balance held in Binance’s wallets has increased by more than 52,000 BTC ($1.5 billion) in four weeks, taking the tally to 692,880 BTC. The global tally (coins held on all centralized exchanges) has increased by more than 27,000 BTC.
The uptick in the balance held on Binance might signify renewed investor confidence in centralized exchanges’ ability to keep their funds safe.
Investor confidence was dented late last year after the collapse of FTX, formerly the world’s third-largest cryptocurrency exchange. Binance also came under pressure after FTX went bust, spurring investors to take direct custody of their coins. In the three weeks before Dec. 19, the number of bitcoin held on Binance fell by nearly 88,000 bitcoins to 580,357.
According to Markus Thielen, head of research and strategy at crypto financial-services platform Matrixport, the sharp rise in bitcoin held on Binance might be bad news for the market.
“Large amounts of bitcoin being moved onto exchanges generally means that those are ready to be sold,” Thielen told CoinDesk.
“We have seen legacy wallets that have not been used for 10 years suddenly awaken and transfer bitcoin. This could be a sign that long-term holdings are thinking prices might be capped around $30,000,” Thielen added.
Bitcoin changed hands at $29,315 at press time, down 0.5% in the past 24 hours, according to CoinDesk data. The leading cryptocurrency has rallied 77% this year and recently hit highs above $31,000.
Macro analyst Tom Dunleavy suggested otherwise, saying the uptick in the exchange balance stems from the demand for dollar alternatives.
“To me, that’s just more renewed interest in BTC the asset as we continue to see signs of struggles with banks in the U.S. and more interest in dollar alternatives,” Dunleavy said in a Twitter chat.
Bitcoin rallied in March amid multiple bank failures in the U.S., strengthening its appeal as a hedge against traditional finance. The cryptocurrency found bids early this week after reports that First Republic Bank (FRC) was close to collapsing hit the wires.
