Viewing Exchange Competition Landscape from BTC Wallet Balance Changes on Major Exchanges such as Binance, OKEx, Huobi
Original Title: "4 Million Wallets Reveal BTC Fund Flow, Which of the Top Three Exchanges Lost Ground in the Stock Market?"
Original Source: PANews
On October 17, Binance released the third-quarter BNB burn data, announcing a total of 2,061,888 BNB burned, equivalent to $36.7 million. Binance believes the burn amount demonstrates significant growth in the third quarter. However, other exchanges do not buy it. Jay, CEO of OKEX, questioned in a Weibo post why Binance burned much more in Q3 when the trading volume was much lower than in Q2, suggesting it was to deceive retail investors into buying BNB. He even criticized Huobi's CEO, Weng Xiaoqi, accusing Huobi of faking trading volume.
The CEOs of the top three exchanges were in a heated argument, leaving most users confused. In fact, wash trading in exchanges is basically a "consensus" in the industry. A report submitted by the U.S.-based crypto asset management company Bitwise to the U.S. Securities and Exchange Commission (SEC) in March of this year indicated that 95% of Bitcoin trading volume on 81 global cryptocurrency exchanges was fake. In a situation where trading volume is highly unreliable, what other methods can be used to perceive the true market dynamics?
PAData joined forces with Chain.info, a one-stop data service platform focusing on blockchain transactions, to uncover the wallets of major exchanges in the global BTC trading market. By observing wallet balance changes and fund flows between wallets, the competitive landscape of exchanges and the transformation of the Bitcoin trading market were revealed.
Exchanges' trading operations involve three types of wallets: recharge-and-withdrawal wallets, hot wallets, and cold wallets. Recharge-and-withdrawal wallets are wallets where each user directly transacts with the exchange. Users can deposit BTC from outside the exchange into these wallets, i.e., deposit into the exchange. Subsequently, the funds in these wallets are either withdrawn by other users or transferred to hot wallets. Hot wallets are the exchange's online wallets, mainly responsible for the circulation of funds between recharge-and-withdrawal wallets and cold wallets, as well as user withdrawals. Cold wallets are the exchange's offline wallets, mainly used for asset storage, and cold wallets only interact with hot wallets for fund transfer.
As of September 30, the ten exchanges with the most BTC balance were collectively monitored with 4.1177 million wallets, of which 4.1175 million were recharge-and-withdrawal wallets, accounting for 99.9%, the largest category of wallets. Bittrex has the most recharge-and-withdrawal wallets, reaching 1.246 million, while Binance has the fewest, with approximately 83,000, and the recharge-and-withdrawal wallet counts of the other eight exchanges are also in the tens of thousands.
The number of hot wallets and cold wallets is significantly less than recharge-and-withdrawal wallets. Among the ten exchanges, Huobi has the most hot wallets at 13, while the number of hot wallets for other exchanges is only in single digits. According to Chain.info's broader monitoring, the approximate number of hot wallets is between 10 and 30. Among the ten exchanges, Bitfinex has the most cold wallets, reaching 58, and Binance also has a considerable number of cold wallets, approximately 38, while the cold wallet counts of other exchanges are around 10.
From the balance in the wallet, it can be seen that for most exchanges, the balance in the cold wallet is the highest, mainly for security reasons. The total balance in the cold wallets of 10 exchanges in the statistical scope is approximately 860,000 BTC, accounting for 81.44% of the total balance. Among them, Binance has the highest balance in the cold wallet, with about 237,000 BTC, followed by Huobi with about 151,000 BTC, and Bitfinex with about 135,000 BTC. It is worth noting that the total balance in Huobi's hot wallet is about 144,000 BTC, much higher than the total balance in the recharge and withdrawal wallets of other exchanges.
The functions of recharge and withdrawal wallets, hot wallets, and cold wallets determine the characteristics of these wallets, and the differences in the characteristics of the three types of wallets among different exchanges also reflect the different styles of fund circulation of each exchange. For example, Binance and Bitfinex will store a large amount of assets in multiple cold wallets, while Huobi retains a large amount of assets in recharge and withdrawal wallets, which can meet the needs of large-scale and efficient recharges and withdrawals.
The total balance of the three types of wallets of exchanges actually reflects the position of exchanges in the BTC exchange market. Theoretically, the more the balance, the better the trading depth, and the more active the trading.
As of September 30, Huobi has the highest BTC balance among exchanges, with a total of 296,000 BTC in the three types of wallets, followed by Binance with 241,000 BTC. Moreover, in the entire third quarter, the BTC balances of Huobi and Binance were much higher than those of other exchanges, jointly leading the BTC exchange market as the "first-tier group."
The "second-tier group" mainly consists of three exchanges, namely Bitfinex, Bittrex, and Bitstamp. As of September 30, the BTC balances of these three exchanges are approximately 137,000 BTC, 122,000 BTC, and 109,000 BTC, respectively. The market rankings of the three exchanges have been relatively stable, with only Bitfinex and Bittrex swapping positions in early July.
Kraken, OKEX, Coincheck, Bitflyer, Bithunmb, BTC.top, Biss, Poloniex form the "Third Tier," which, unlike the stable situation of the "First Tier" and "Second Tier," saw multiple changes in the BTC trading market in the third quarter. OKEX dropped from 6th to 7th at the beginning of July, with Coincheck surpassing OKEX to take the 6th position in the market. By the end of September, Poloniex replaced Upbit to rank 10th. Furthermore, the competition among exchanges outside the top 10 intensified, with Bithumb sliding from 11th place, and BTC.top and Biss taking the 11th and 12th spots after replacing others.
In the third quarter, the price of BTC has fallen from the high point of the mini bull market, dropping from $10,640 on July 1st to $8,331 on September 30th, a decrease of 21.7%. The change in net inflows of exchanges during the third quarter [1] shows that only the top exchanges can maintain their advantage and strengthen their position in a market downturn.
The top three exchanges by balance, Huobi, Binance, and Bitfinex, had net inflows of 52,000 coins, 23,000 coins, and 9,000 coins, respectively, in the third quarter. Especially Huobi, with over 50,000 net inflows, further solidified its position in the BTC trading market.
In addition to the top exchanges continuing to attract market funds, lower-ranked exchanges like Bitflyer and Coincheck also absorbed a small amount of funds. In the third quarter, Bitflyer had a net inflow of about 1,500 coins, and Coincheck had a net inflow of about 2,100 coins. On the other hand, the exchange with the least net inflow was OKEX, with a total outflow of 18,000 coins in the third quarter. Additionally, Bittrex and Bitstamp each saw outflows of 6,000 coins and 3,000 coins, respectively.
The current cryptocurrency market is still a niche market, with one of its characteristics being that the main form of market competition is a competition for existing holdings. Therefore, observing fund flows between exchanges can provide insights into the exchange competition landscape.
According to statistics, third-quarter exchange transfers show that Binance lost 104,000 BTC to other exchanges, and no significant inflows of BTC from users of other top-ranked exchanges to Binance were detected. In the third quarter, Binance failed to hold its market share.
Other exchanges that saw significant outflows of BTC to other exchanges were Huobi and OKEX, which transferred out 71,000 and 53,000 BTC respectively. However, on the other hand, these two exchanges also attracted a large amount of funds from the existing holdings market. OKEX attracted the most, receiving approximately 119,000 BTC transferred from other exchanges, while Huobi received around 61,000 BTC transferred from other exchanges. Another notable performance in the existing holdings game is Bitstamp, which received approximately 49,000 BTC from other exchanges and only transferred about 10,000 BTC to other exchanges.
The process of exchanges competing for existing holdings weaves a complex web of funds [2], which is essentially the result of users "voting with their feet." PAData visualized the third-quarter transfers between exchanges as a network, where arrows indicate the direction of the transfer, and the thickness of the lines represents the amount of the transfer.
From the fund flow, it can be seen that the fund movement between Binance, Bitstamp, OKEX, and Huobi is very active. Particularly, the fund flow between OKEX and Huobi is the most active, with OKEX users transferring to Huobi 342 times, totaling about 35,000 BTC, and Huobi users transferring to OKEX 476 times, totaling about 58,000 BTC.
In the third quarter, 100,000 BTC flowed out from Binance to other exchanges and was mainly absorbed by three exchanges. Binance users transferred to OKEX 382 times, totaling about 51,000 BTC, transferred to Huobi 202 times, totaling about 22,000 BTC, and transferred to Bitstamp 176 times, totaling about 21,000 BTC.
The bi-directional interaction volume between Bitstamp and OKEX, Huobi is relatively small. In the third quarter, Bitstamp users transferred to OKEX 56 times, totaling about 7,000 BTC, while OKEX users transferred to Bitstamp 80 times, totaling 14,000 BTC. Bitstamp users transferred to Huobi 14 times, totaling about 1,000 BTC, and Huobi users transferred to Bitstamp 72 times, totaling about 6,000 BTC.
The position of an exchange in the fund flow network closer to the center indicates a more central position in the overall network relationship, whereas a position closer to the periphery indicates a more marginal position in the overall network relationship, with less active interaction with other exchanges. It can be observed that ZB, BTC.top, and Coincheck all play peripheral roles. Transactions related to ZB involve only 8 transfers totaling 634 BTC from Binance, Huobi, and OKEX. Transactions related to BTC.top involve only 2 transfers totaling 135 BTC from Huobi, and a total of 8 transfers totaling 726 BTC from OKEX and Huobi. Transactions related to Coincheck involve only 3 transfers totaling 214 BTC from Huobi and Poloniex.
Exchange Outflow Impact on Volatility
Original Article: https://mp.weixin.qq.com/s/eq6XNdDcHp6Vu18WYw9MBA
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