Glassnode, a prominent data analytics firm, recently released a report about the ongoing hostilities in the US regulatory environment. Specifically highlighting the US SEC charges against major crypto exchanges Binance and Coinbase for securities violations were in the spotlight.
The report delves into the investor response to these charges, focusing on exchange inflows and identifying which investor cohorts exhibited panic and which remained calm.
Following the news of the charges against Binance on June 5th, the market experienced a downward spiral, with Ethereum (ETH) dropping 5.4% and Bitcoin (BTC) plummeting 6.8%.
However, as news broke of the charges against Coinbase on June 6th, both assets managed to recover some of their losses. By the end of the week, ETH had fallen by 8.2%, while BTC fared slightly better with a 6.4% decline.
The repercussions of the charges against these exchanges have been analyzed by Glassnode, focusing on exchange outflows and the breakdown of deposits by investor cohort.
After the news broke, Binance witnessed a steady stream of asset withdrawals, with stablecoin balances experiencing the largest decline of note. Binance’s stablecoin reserves have plummeted by a staggering 75% since November 2022.
In comparison, Coinbase experienced less dramatic changes in net reserves, with stablecoin balances remaining stable and BTC balances declining by a modest 0.5%.
However, a substantial decline of 291,000 ETH, equivalent to around 8.0% of the total balance, indicates a more pronounced investor response, potentially related to concerns over the staking services offered by the exchange.
Binance Withdrawals & Deposits By USD Size
Further analysis of exchange withdrawals by USD size reveals an interesting divergence in investor behavior. Transactions below $10 million consistently experienced withdrawals totaling over $130 million per day throughout the week.
On the other hand, transactions above $10 million consistently saw deposits ranging between $15 million and $30 million per day. It suggests that larger entities, such as institutions, were more significantly impacted by SEC news compared to smaller entities.
Despite some investors reacting to the news by depositing coins into exchanges, the overall picture reveals a sense of apathy.
Most coins sent to exchanges were acquired recently and at prices close to the current spot rate, indicating that investors remain confident or indifferent, as the current price range does not incentivize them to sell.
The low values of the Sell-side Risk Ratio and the Realized RVT Ratio further illustrate investor apathy. These metrics, comparing aggregate profit/loss and transfer volumes, indicate historically low levels of sell-side risk and a lack of significant realized profit or loss.
Nevertheless, the regulatory landscape in the US continues to cause turmoil, with Binance and Coinbase facing legal charges.
While some investors panic and de-risk their positions, others display remarkable calm and indifference. The long-term holders, in particular, seem unfazed by the news. As these lawsuits unfold, the true extent of investor reactions remains uncertain.
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