Billions of dollars are disappearing...what is happening in the cryptocurrency market
A large shareholder in the market withdrew huge sums of money"
After the shock caused by the bankruptcy of the FTX cryptocurrency platform, a new concern has descended on investors in the field of cryptocurrencies after a massive withdrawal of funds from the largest cryptocurrency platform (Binance).
Investors withdrew as much as $3 billion from Binance on Tuesday, according to blockchain analyst Nansen.
Why such a big draw?
A report by " CNN Business " attributes this to the negative atmosphere prevailing in the digital currency market, which frightened users of the largest exchange for these currencies in the world.Nansen's content manager, Andrew Thurman, told CNN that Binance saw "this surge in withdrawals after the publication of a report on the ongoing investigation by the US Department of Justice into the stock exchange, which made investors nervous."
The second factor that destabilized the situation was the revelation that "a large shareholder in the market has withdrawn huge amounts of money from Binance without making a deposit over the past weeks."
These factors created panic in the markets.
Is Binance like FTX?
CNBC that “the situation for Binance is completely different from what happened with FTX.”
He explained that "Binance has assets worth $ 60 billion, and withdrawals constitute a small percentage of it."
Within the framework, Binance CEO Changpeng Zhao stated that the stock exchange witnessed withdrawals of about $ 1.1 billion, according to CNN.
"Funds are flowing back into the platform," Zhao reassured, during an interview on Twitter, describing the withdrawals that took place as "very normal behavior in the market."
Zhao said some investors pulled out of the cryptocurrency sector after the collapse of FTX in November.
Commenting on this withdrawal, Zhao considers that the damage caused to some investors from FTX made some believe that all other digital currency platforms are bad, but he clarified that "if one bank is bad, this does not mean that all other banks are like it."
Concerns about the sector have driven down cryptocurrency prices. Bitcoin has reached below $18,000, down more than 60 percent since the beginning of the year.
Binance's business is also under scrutiny after FTX's bankruptcy, according to a CNN Business report.
Zhao said, on Wednesday, that the situation has "stabilized" on the Binance currency exchange, in an attempt to calm investor concerns after the company was forced to halt withdrawals.
Should investors withdraw their funds from cryptocurrency exchanges?
Digital currency consultant, Nader Al-Dirani, gives advice to investors in this field, saying that “you should use the Binance platform for trading, and use an independent “Software wallet” such as “TrustWallet” or “Hardware Wallet” such as “Ledger” to hold the currencies that the individual owns.
He explains that the platforms are for trading only, and are not the appropriate place to keep a person's digital currency holdings.
Al-Dirani says that according to statistics and analysis of trading platform data, the Binance platform's portfolio stock fell by 8 percent of bitcoin, and during November the stock returned and rose 24 percent while the FTX platform was collapsing.
He said that according to Zhao's statement, on Wednesday, the total user withdrawals from the Binance platform amounted to about $6 billion, while deposits exceeded $6.5 billion.
Al-Dirani stressed that Binance is the first in the world, with a huge difference from the competitor in the next rank, and it leads the digital currency market, especially in terms of obtaining licenses from many countries, such as France, Spain, the UAE and others.
Cryptocurrency bubble ?
Financial markets expert Nadim El-Saba considered, in a previous interview with Al-Hurra, that FTX is not the first platform to go bankrupt, and it will not be the last. Other digital currency trading platforms will fall successively like "dominoes".
However, he noted, "It cannot be said that the era of cryptography has ended because the market is more than just a trading platform. The idea of the blockchain is broader than just a digital currency that trades and falls."
He added that what is happening is a washing of the market so that it is cleansed of all platforms that were using people's money for suspicious investments. This is now leading to many losses.
The era of encryption is going through a sensitive stage, but it will not end it, but rather it will continue in a dysfunctional way, according to Al-Sabaa.
He stressed that “in the digital currency market, it is normal for people to lose their money, especially as they invest in assets with a high degree of risk.
For his part, financial expert Dan Azzi, who identifies himself as an opponent of digital currencies, explained earlier in an interview with Al-Hurra that "these currencies are nothing but fraud that seduces people, and their end is total collapse," adding that "this collapse will not happen now." ".
For Azzi, two things must happen for cryptocurrencies to collapse completely:
To begin with, it follows that the phenomenon of blind imitation has ended, after the people who lost their money in these currencies are unable to re-enter speculation, and therefore they will not be a motivating factor for others to imitate.
On the other hand, an accounting process must take place that affects the markets, as cryptocurrencies are not monitored, and everything that is prohibited in regular markets is permitted in the digital currency market, and this leads to many institutions exploiting this situation, and benefiting from people who do not know much about the field. .
He points out the importance of "interfering with the authorities in the world of encryption, or putting an end to it by holding lawless institutions accountable, and the FTX incident may be a lesson in this field."
However, CoinBase CEO Brian Armstrong had a different opinion, as he considered in an article he wrote on the “CNBC” website that “the fall of FTX occurred as a result of risky and unethical business practices, including conflicts of interest.” between interlocking entities, as well as the decision to lend clients assets without permission.”