Binance Resumes Bitcoin Withdrawals and Explains Sudden Outflow

Binance, a cryptocurrency exchange, has clarified that the recent reports of significant Bitcoin (BTC) outflows were misleading.

In a tweet on May 8, the exchange explained that the so-called “outflows” were actually internal transfers between its hot and cold wallets prompted by address adjustments.

Major outflows explained

Over the past 24 hours, data from Coinglass indicated that Binance witnessed approximately 180,000 BTC outflows. This information was further supported by CryptoQuant, which reported that the exchange experienced outflows of nearly 190,000 BTC in the last two days.

These reports raised concerns within the crypto community, leading to worries about the exchange’s overall balance. However, CryptoQuant’s Head of Research, Julio Moreno, clarified that the transactions involving 117,000 and 40,000 Bitcoin were transfers to newly created addresses owned by Binance.

A lot of people commenting about the huge Bitcoin outflows from Binance today.
Two transactions of 117K and 40K Bitcoin respectively.

In reality, these are bitcoin sent to newly created change addresses that belong to Binance.

Effective outflows are most likely just 10,100… pic.twitter.com/c5z8WOshG6

— Julio Moreno (@jjcmoreno) May 7, 2023

Moreno estimated that the outflows from Binance were likely around 10,100 BTC.

Market analyst Joe Consorti from Bitcoin Layer pointed out that Binance did not encounter a significant reduction in its Bitcoin balance. Consorti attributed the confusion to mislabeled wallets by various service providers, which made routine wallet shuffling appear as if there were deposit outflows.

He stated, “In reality, the BTC outflows are far more muted, only totaling -11,000 over the past week.”

Meanwhile, Binance highlighted that DeFiLlama data provided accurate information regarding the movement of its wallets. According to this data, the exchange holds approximately $16.9 billion worth of Bitcoin, while the total value of assets on the platform amounts to $65.61 billion.

In a separate development earlier today, Binance announced its efforts to enable support for the Bitcoin lightning network. This decision was prompted by network congestion issues, which compelled the exchange to pause withdrawals twice within a 24-hour period.

To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed.

Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations.

— Binance (@binance) May 8, 2023

Binance stopping BTC withdrawals

Binance has recently reinstated Bitcoin (BTC) withdrawals following a temporary suspension due to the unprecedented congestion on the Bitcoin network.

$BTC withdrawals are now resumed on #Binance.

Pending transactions are being processed by replacing them with higher transaction fees.

We'll post another update once these pending transactions are all processed.

— Binance (@binance) May 8, 2023

On Sunday, Binance halted Bitcoin withdrawals for approximately two hours in response to the surge in unconfirmed transactions, which reached a record high. Another brief pause occurred later that same day, lasting slightly over two hours.

In a tweet, Binance stated that they had adjusted their fees to prevent similar occurrences in the future. They will continue to monitor on-chain activity and make further adjustments as necessary.

At the time of the second suspension, the number of unconfirmed transactions was close to 500,000, up from approximately 400,000 during the first pause. However, it has since started to decrease and currently stands at slightly over 430,000 over a 12-hour period.

The transaction fee has experienced a substantial surge in recent months, with the current average fee reaching its highest level in a span of two years. According to data obtained from YCharts, the present transaction fee has soared to $19.21, marking an astonishing increase of 789% in comparison to the corresponding period in the previous year.

The price of Bitcoin has experienced a gradual decline and currently sits at $28,240, reflecting a 2.6% decrease in the past 24 hours.

Author

Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.