Users of the Binance cryptocurrency exchange deposited $1.65 billion in stablecoins, which usually signals a recovery in demand for spot cryptocurrencies after recent market sell-offs. According to on-chain analytics provider CryptoQuant, the deposits coincided with nearly $1 billion in Ethereum (ETH) withdrawals. Notably, Binance's net stablecoin deposits exceeded $1.5 billion twice this month, marking a return of capital to the spot market, wrote Amr Taha of CryptoQuant.
As the largest cryptocurrency exchange by trading volume in the world, Binance is closely monitored for signs of broader market changes. On Tuesday, Binance processed over $29.5 billion in transactions, nearly six times that of the second-ranked Bybit. Stablecoins are the primary source of funds for cryptocurrency traders, and their inflows into exchanges typically indicate readiness to purchase digital assets.
The timing on Tuesday was particularly significant as the crypto market continued the sluggishness seen at the beginning of the week: Bitcoin (BTC) and Ethereum gave back gains made on Friday after Federal Reserve Chair Jerome Powell hinted at a potential rate cut in September. The market's extreme volatility stemmed from a wave of liquidations in major Bitcoin positions over the weekend, when a whale sold 24,000 BTC on Sunday, leading to heavy selling pressure.
Another reason for Bitcoin's recent volatility is the steady outflow from U.S. spot Exchange-Traded Funds (ETFs). According to CoinShares, over $1 billion flowed out of Bitcoin ETFs last week. However, on Monday, these products saw their first net inflow in six trading days.
