Fear across the market following the recent Binance hack is understandable.
In just 24 hours, market sentiment has taken a sharp hit. The Fear & Greed Index has fallen to its lowest point since mid-August to 30 (Fear) from 51 (Neutral). This comes amid the $6.3 billion Binance exploit, adding pressure to an already weak market. Bitcoin dropped 4-5%, touching a six-week low near $76,500 and Ethereum falling below $2,200. Meanwhile, over $1.6 billion in positions were liquidated on the market.
Against this backdrop, AMBCrypto’s latest report starts to make more sense. The largest hack in crypto history has hit the biggest exchange in the space, but Binance is showing signs it is taking it well. Out of the $6.3 billion drained, $3 billion has been frozen, and the rest is being made up by the SAFU fund.
Backing this up, CryptoQuant analyst Darkfost highlighted the trend in the chart above:
Despite the large exploit, the impact on Binance’s reserve was not too severe. BTC’s value dropped by 3.1%, ETH by 8.5%, XRP by 8%, and USDT by 6.3%. It appears that the shock has been absorbed, keeping the broader impact on users relatively limited.
In this context, the fear could cause an ideal setup for the strong hands to “buy the dip.” As Bitcoin absorbs post-hack selling pressure and weak hands get shaken out, momentum could shift towards a recovery in the $90k range. But the key question is: Do on-chain metrics support this bullish setup?
Bitcoin’s fear signals align with on-chain buying pressure
Bitcoin’s [BTC] on-chain metrics could reveal whether strong hands are stepping in.
The latest selloff has triggered a major leverage flush, with BTC falling below $76,000 and ETH slipping under $2,200. In the last 24 hours, over $1.54 billion worth of leveraged positions were liquidated, indicating a large weak-hand shakeout. However, there was also significant net outflows from exchanges, as over 23,600 BTC moved out of exchanges, hinting at continued accumulation despite broader market fear.
Meanwhile, Bitcoin’s Coinbase Premium Index has reached a 4-year low, last seen in November 2022 when the FTX collapse occurred. Interestingly, this was also the time that Bitcoin formed a market bottom. Although it is too early to tell if it is reversing, there are some parallels to suggest Bitcoin could be nearing another accumulation phase.
In short, Bitcoin’s Fear & Greed Index could be masking a shift in underlying market sentiment.
With on-chain data suggesting accumulation and Binance reserves appearing to recover, selling pressure appears to be cooling off. This puts a potential shift from distribution to a move towards accumulation back in focus, setting the stage for a broader market recovery.
If this trend holds, Bitcoin could continue to hold up well at the key $73k support level ahead of some major macro events.
Final Summary
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Despite market fear, BTC outflows and Binance’s resilient reserves suggest buyers are stepping in.
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With weak hands shaken out, Bitcoin’s ability to hold $73k support remains key ahead of major macro events.