Soaring Bitcoin (BTC) balances on the exchanges may not be a sign that investors are preparing to sell, argues new research.
In revealing the latest data from all exchanges on December 28, Glassnode on-chain analyst TXMC pointed a finger at new changes in China for rising balances elsewhere.
Binance “absorbing” orphaned Huobi users
The end of December irritates the nerves, as a range-bound BTC price is combined with increased inflows on the stock exchanges.
As a classic indicator that traders should at least prepare to reduce the risk in the event of a further price weakness, Binance was observed particularly closely when BTC shares rose.
At the same time, however, following China’s ongoing crackdown on trading in cryptocurrencies, Chinese investors are being excluded from international spot trading venues.
Huobi Global, the international subsidiary of China’s Huobi Stock Exchange, banned mainland Chinese citizens from accessing its trading services on December 15. They now have until the end of the month to sell funds, after which a one to two year withdrawal will give you a window to remove them from your accounts.
“As of 4:00 p.m. (UTC) on December 31, 2021, users in mainland China will no longer be able to sell their inventory or conduct transactions with CNY,” said a blog post published on the closing day.
“If users have to withdraw sales orders before they are posted, the system automatically cancels any outstanding sales orders. The Withdrawal feature will remain available for 1 to 2 years and will be announced before it closes. Users in mainland China are encouraged to manage their digital assets as soon as possible. “
As a result, these users could simply move tokens to other platforms, which explains the increase in Binance’s balance.
“Binance has been making noise lately as their foreign exchange balance has increased. My theory is that they are accepting users from Huobi and elsewhere as China is closing some exchanges at EOY, ”TXMC commented on a graphic that supports the idea.
“Strangely enough, Binance + Huobi’s balances are moving sideways. Net neutral. “Bitcoin Exchange Balance vs. BTC / USD Chart. Huobi (blue), Binance (green), combined (red). Source: TXMC / Twitter
Liquidity challenges
As Cointelegraph reported, sell-off concerns will increase due to the holiday season with lower volumes and overall flatter markets.
Related: Bitcoin veterans are still selling record-low amounts of BTC despite a 70% gain in 2021
This lack of liquidity could exacerbate sudden moves as key institutional players don’t return until next week.
Nuances remain, however, as retail investors continue to build BTC portfolios while larger investors appear less secure.
A retail-fueled mass sell-off event is also viewed as an unlikely event in the future, according to the analysis.
