Binance Sees USD Outflows of $5B as Users Withdraw Funds

🌅 Welcome!

MetaMask is partnering with one of the world’s largest digital payment platforms and SBF may have just seen his last day as a free man.

Today, we take a look into the recent outflows from Binance while our Research team provides insights into the exodus of BTC and ETH from exchanges.

This is the Delphi Daily. Let’s dive in.

🚨 In Case You Missed It

Paypal partners with MetaMask to integrate its buy, sell and hold crypto services with the non-custodial wallet.
U.S. Senators Elizabeth Warren and Roger Marshall introduce a bill that will bring KYC rules to wallet providers and miners.
A Bahamas judge denies bail to SBF who will now remain in custody at the Bahamas Dept. of Corrections. If convicted, his maximum sentence is 115 years in prison.
The Federal Reserve hikes its benchmark interest rate by 50 bps to 4.50%, the highest level in 15 years.

📊 Binance Sees USD Outflows of $5B as Users Withdraw Funds

Over the past two days, the total value in the on-chain wallets of Binance has decreased from $65B to $60B as the exchange saw more than $5B of USD outflows. This is the largest outflow since the exchange shared its addresses on Nov. 11, 2022.
Yesterday, Binance paused USDC withdrawals, stating that the process involves going through a bank in New York which had not yet opened for the day. The exchange resumed USDC withdrawals later in the day.
As the U.S. Congress holds hearings over the FTX collapse, concerns regarding Binance have been growing, leading to an increase in withdrawals. Notably, market maker Jump Trading has redeemed $106M in BUSD over the past week.
Binance published a proof-of-reserves report on Dec. 7, 2022, stating that the exchange held more assets than client deposits at a 101% collateralization ratio. However, the report does not seem to have reassured the market.
Since the FTX collapse in November, users have increasingly lost trust in centralized institutions in crypto. While it is unlikely that Binance will share the same fate as FTX, it is prudent to hold your funds in a non-custodial wallet instead.

⚡Monthly Chartbook – Uncertainty Post-FTX Collapse

In a year seemingly filled with black swan event after black swan event, one of the main themes of 2022 has been the mass exodus of crypto assets from centralized exchanges.
In this year alone, we have witnessed a host of damaging incidents, with the most recent FTX contagion taking the crown. This has led to the erosion of trust in centralized custodial services.
2022 has seen the largest YoY percentage declines in BTC and ETH held on centralizing exchanges, both down nearly 20%.

Digging in a bit deeper, the month of November also saw historic decreases in CEX holdings. In the last 30 days alone, BTC held on CEXs has fallen 8%, with ETH seeing an 11% fall (roughly 185k BTC and 2.6M ETH).
The percentage decline in November marks the third-largest monthly decline in BTC’s history and the fifth-largest in ETH’s, with both percentage declines being the largest ones since 2017.

For nearly the entire month of November, BTC’s price was beneath this historical floor price, which currently sits at ~$16.9k (estimates based on research from Capriole Investments Limited).
Historically speaking, this rarely occurs. In fact, the Covid capitulation in March 2020 marked the most recent occurrence prior to 2022. The month of November also saw the longest period of time BTC traded below its electrical cost since January 2017.
BTC miners continue to foot electrical costs that exceed the revenue generated from mining operations. That’s just raw electrical expenses, however.
When other expenses are factored in, such as hardware, bandwidth, wages, rent, insurance, etc., the level of pressure continues to mount on miners. This has led to several miner bankruptcies so far this year.
For more on gaming trends and news, Delphi members can read our Delphi Proreport here.

🐣 Notable Tweets

On the People Testifying About the FTX Collapse

The people testifying in front of Senate about FTX collapse:

• @kevinolearytv paid SBF shill received $15M to promote FTX

• @ben_mckenzie appeared on reality TV 15 yrs ago, one musical, and is self described anti BTC & crypto That sounds bad but it could be much darker…

– Luke Martin (@VentureCoinist) Dec 12, 2022

On a Fed Pivot

The Fed is hedging just about everything they say to avoid markets taking a definite stance.

They are turning less hawkish, but want it to be clear that inflation is still a problem and inflation risks are to the upside.

It’s a “Fed pivot” with a disclaimer attached to it.

– The Kobeissi Letter (@KobeissiLetter) Dec 14, 2022