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On Monday, Glassnode released a report analyzing the on-chain activities of investors following the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against two of the largest cryptocurrency exchanges globally.
The report noted an increase in the number of short-term cryptocurrency holders transferring their assets to exchanges.
Exchange Deposits and Withdrawals
The findings were consistent with last week’s observations, indicating that Binance saw a significant rise in withdrawals right after the SEC’s filing on Monday. Over the past week, the platform’s Bitcoin and Ethereum reserves have decreased by 40,200 BTC (5.7%) and 324,000 ETH (7.1%) respectively.
In addition, Binance’s stablecoin reserves experienced the most substantial decline, dropping by $1.6 billion (20.9%) in the last week. Since the collapse of FTX in November 2022, Binance’s stablecoin reserves have plummeted by an impressive 75%, from $26 billion to merely $6.5 billion today, primarily driven by another SEC action against its Paxos-issued BUSD stablecoin.
“The exchange continues to maintain some of the largest reserves of any on-chain entity, and their BTC and ETH holdings remain quite significant,” Glassnode clarified.
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Coinbase, which was sued the day after Binance for various violations of securities laws, experienced comparatively smaller Bitcoin (BTC) withdrawals of only 2,300 BTC (0.5%). However, Ethereum withdrawals were notably higher at 291,000 ETH (8.0%), potentially reflecting increased investor anxiety regarding the company’s staking-as-a-service offering.
Behavior By Cohort
Investor actions related to exchanges appeared to vary by cohort: transactions below $10 million were predominantly withdrawals, while those exceeding $10 million were mainly deposits, with net inflows fluctuating between $15 million to $30 million daily.
“This indicates that larger entities (such as institutions) are more significantly impacted by the SEC news compared to smaller entities,” Glassnode stated.
Moreover, short-term cryptocurrency holders are exhibiting increased activity, representing 76% of the recent BTC deposit volume (in contrast to the usual 60%). These deposits constituted 0.93% of the total balances held by short-term holders on exchanges. In comparison, long-term holders displayed “no noticeable reaction to the news.”
Analysis from CryptoQuant indicates that even short-term holders are hesitant to sell their assets aggressively, as this group is waiting for an opportunity to secure greater profits from their investments.
The overall cryptocurrency market experienced a downturn following the SEC’s lawsuits last week, with particular distress among coins specifically mentioned in the agency’s filing against Coinbase: Solana (SOL), Cardano (ADA), and Polygon (MATIC).
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