Julio Moreno, head of research at CryptoQuant, said Binance’s reserves have decreased by about $8 billion in the past seven days. The decline was seen across Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and USD Coin (USDC). He noted that this move is not a break in the trend, but rather falls within a pattern seen earlier in the cycle.
Some people talk about the decline in Binance’s reserves.
Reserves have taken a hit, but there is nothing out of the ordinary.Reserves for BTC, ETH, USDT, and USDC have declined by approximately $8 billion over the past seven days, which is on par with the rest of the current cycle.
Just a few weeks ago… pic.twitter.com/9wdSZTrCVK
— Julio Moreno (@jcmoreno) October 16
USDT hit a high of $38.2 billion, but total reserves remained close to $135 billion.
Moreno highlighted the details, noting that Binance’s total digital asset reserves remain at around $135 billion, while USDT reserves have increased to an all-time high of $38.2 billion.
It is worth noting that the digital asset reserves of major exchanges influence the behavior of crypto traders and play an important role in interpreting future trends. Lower reserves usually mean fewer tokens of a particular cryptocurrency on the trading platform, which means less liquidity.
Related: Binance disputes $21.75 billion outflow. BTC holds $111,000 as Method Mathematics catches fire
Why the decline in foreign exchange reserves is related to liquidity and volatility
According to historical data, every time the reserves of digital assets decrease, the volatility of the cryptocurrency market increases. This is because large buy or sell orders have a large impact on the price of cryptocurrencies due to their relatively low liquidity.
Therefore, cryptocurrency markets tend to become more volatile when the reserves of major digital assets decrease on major exchanges.
7-day price snapshot of BTC and ETH
According to TradingView data, Bitcoin has fallen 10% over the past seven days, which is consistent with the decline in digital asset reserves observed by Moreno. Ethereum’s price fell 20% over the same period, in a backlash that affected almost the entire crypto market.
Meanwhile, most cryptocurrencies have established new support levels as rebound expectations rise. However, overall bearish pressure continues as traders await external decisions, such as the expected SEC approval of ETFs for various altcoins, which will propel the next phase of the bullish cycle.
Related: US Treasury Clarifies Position on Strategic Bitcoin Reserve Plan
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