- The halting of Bitcoin withdrawals acted as a catalyst for USDT’s quiet volume and circulation truancy.
- The exchange explained that the big BTC move was simply a change of address.
from Binance resolution to stop temporarily Bitcoin [BTC] withdrawals can have unforeseen consequences for Tether [USDT]. According to Twitter user Parrot Capital, the value of USDT on the exchange fluctuated between $1.03 at low volume and $0.130 at high volume during the period.
🚨BINANCE WARNING🚨
The #BinanceUS #Tether $USDT Unpleasant $USD peg broke 🚩, spiked to almost $1.30 on high volume and returned to $1.03 on low volume.
This comes as #Binance international has banned users 🚩 from inclusion #Bitcoin several times today.
Not good. pic.twitter.com/wttMeSuFoJ
— Parrot Capital 🦜(Follow me and read the pinned 🧵) (@ParrotCapital) May 8, 2023
Read Binance Coins [BNB] Price prediction 2023-2024
While Binance cited congestion in the Bitcoin network as the reason for halting BTC exchange or withdrawals, it’s worth noting that it was the only major exchange to take action.
Dealing with the inability to…
However, when Binance stopped withdrawals, it caused a disruption in USDT supply and demand dynamics, leading to cracks in the USDT dollar peg.
This caused a surge in demand for USDT as traders sought to move their assets to a more stable form. The increased demand for USDT put pressure on the available supply. This, in turn, led to Binance’s inability to fulfill a significant portion of orders, the blockchain transparency watchdog revealed.
There is a lot of buying and selling $USDT orders on the books, but the orders actually executed are small in comparison. pic.twitter.com/VuZMvE5bfP
— Parrot Capital 🦜(Follow me and read the pinned 🧵) (@ParrotCapital) May 8, 2023
As a result, the value of USDT briefly deviated from its target 1:1 peg to the US dollar, fluctuating and potentially undermining its stability. This implied that there was no real depth to the trading volume. Some have even suggested that this could be a case of market manipulation, with Binance being the prime suspect.
Looking at on-chain data, Santiment showed that USDT volume increased slightly to 23.55 billion. however, the stablecoins circulation over the past 24 hours was at its lowest point in more than four months.
Circulation, in crypto, reflects the number of unique coins or tokens used in transactions within a given period of time. Since Binance has the highest trading volume among all exchanges, the inability to trade has affected USDT’s absence from circulation.
Source: Sentiment
CZ: Is the man guilty or not?
Some of the comments from the Parrot Capital disclosure suggested that Binance, led by Chanpeng Zhao (CZ), was not fair in their dealings. For others, this was a sign to pull assets off exchanges.
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Meanwhile, the exchange resumed BTC withdrawals by adjusting fees. However, it did not immediately respond to the allegations. But it cleared the air on his 162,000 BTC outflow as a simple “address adjustment” between his hot and cold wallets.
We are aware that some data shows a large outflow of #Binance.
These ‘outflows’ are actually movements between Binance hot and cold wallets as a result of the BTC address adjustments.
— Binance (@binance) May 8, 2023
In the meantime, the incident has sparked discussions and debates within the crypto community on whether service providers should be detained according to their credibility in the space. Furthermore, Parrot Capital was not convinced by Binance’s explanation, noting that:
“Binance answer makes no sense as other exchanges didn’t have to stop withdrawals, nor does it explain the huge USDT depeg. Again, CZ is not answering the real questions while he remains on the run.”
