Crypto influencer Julian Hosp recently shed light on the possible influence of the leading crypto exchange Binance in Bitcoin’s rally earlier this year. The crypto exchange’s decision to convert billions of USD bank deposits into BTC and other crypto assets reportedly led to an increase in the cryptocurrency’s’ price in the first half of 2023.
Julian Hosp took to Twitter earlier today to highlight Binance’s role in Bitcoin’s recent rally:
Over time, the data gets clearer and clearer. The main reason #bitcoin did so well in H1 2023 was Binance having to get rid of their USD. https://t.co/XLBJyuNp4J
— Dr. Julian Hosp (@julianhosp) August 8, 2023
Hosp, who serves as the Chief Executive of digital asset firm Cake Group, cited data gathered by fellow crypto Twitter members, which highlighted Binance’s proof of reserves. A proof of reserve (PoR) refers to a third-party audit that ascertains a crypto exchange’s crypto holdings against its clients’ digital asset balances.
Binance’s proof of reserve was last updated on August 8, 2023. According to the data shared by Hosp, the world’s largest crypto exchange was withdrawing USD from its bank accounts in the United States following the collapse of multiple tech-focused banks, including Silicon Valley Bank (SVB), Signature Bank, and Silvergate Bank.
The influencer reported that in early 2023, Binance was converting the USD Coin (USDC) deposited by its customers into Binance USD (BUSD). However, the exchange proof of reserve as of March 1, 2023, showed that the difference between customer net balances and Binance net balances was $3.5 billion, which indicated that the converted stablecoins were retained in the exchange’s reserves.
Following the collapse of Signature Bank on March 12, 2023, Binance began converting its USDC balance to Bitcoin (BTC), Ether (ETH), and Tether USD (USDT). As per the influencer’s estimates, Binance purchased a whopping 100,000 and 550,000 ETH BTC between March 12 and May 1, 2023. This rapid BTC acquisition led to a 56% surge in BTC between March and May 2023, taking its price from $19,780 to $30,900.
However, Binance started dumping its Bitcoins after mid-May, which was reflected in the customer net balances to Binance net balances ratio. The price of BTC would have tanked if not for the hype around spot Bitcoin ETF applications which renewed investors’ interest in BTC.
