Binance has seen one of the largest liquidity declines this week, according to on-chain data on Tuesday that revealed billions of dollars worth of stablecoins and popular cryptocurrencies moving out of the exchange.
On X, trader CryptoOnchain, sharing data from CryptoQuant, revealed that there have been constant outflows from USDT, USDC, Bitcoin, and Ethereum on Binance.
The pattern indicates that capital is moving out of Binance and not between different supported assets. This pattern has revealed a significant decline in liquidity on the exchange.
Source: X
According to the data revealed by CryptoQuant, outflows from ERC-20 USDT have been approximately $2.26 billion over the last seven days. USDC outflows have been approximately $1.24 billion, which indicates a significant decline in stablecoin reserves on the exchange.
Other popular cryptocurrencies have also seen outflows from the exchange. Bitcoin has seen approximately $2.14 billion worth of net outflows, and Ethereum has experienced close to $1.35 billion moving out of the exchange.
Binance’s token, BNB, was trading at $880 on Tuesday and has seen a 0.9% price increase. The trading conditions have remained stable, although the decline in liquidity has continued to affect the trading conditions on the exchange.
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CryptoOnchain said the withdrawal of stablecoins and major cryptocurrencies has reduced the capital available for new positions.
Lower balances on the exchange can also trigger stronger market reactions when large orders enter the system. The analyst noted that current conditions may lead to sharper price moves on key trading pairs.
Historically, a decline in exchange liquidity can lead to increased volatility in the markets. With less capital available on Binance, the exchange’s internal liquidity can have less impact on the overall price discovery on the markets.
The markets may be less affected by Binance’s internal liquidity if outflows persist at high rates. In another update, CryptoOnchain reported that CryptoQuant data shows the Ethereum Coinbase Premium has dropped to -0.08, the lowest level since early 2023.
Source: X
A decline in the premium indicates that ETH is trading at a discount on Coinbase when compared to offshore exchanges.
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