Cryptocurrency
Binance exit aftershock: Can one resignation tip the crypto trust scales?
On Sept. 13, news broke of yet another high-level executive parting ways with Binance.US.
This time, it was none other than Brian Shroder, the CEO and president of the exchange, who, after two years in the hot seat, was heading for a “deserved break,” as Binance CEO Changpeng “CZ” Zhao was quick to announce on X (formerly Twitter) that same day.
There has been some speculation regarding recent management changes at @BinanceUS. Brian Shroder is taking a deserved break after accomplishing what he set out to do when he joined two years ago. Under his leadership, https://t.co/hSHrrlF7o7 raised capital, improved its product…
— CZ Binance (@cz_binance) September 15, 2023
The news coincided with the announcement that around 100 people had also lost their jobs that day — about a third of the workforce.
A massive outflow of funds followed, with the highest being just over $66 million in a single transaction. Zhao was keen to underline that Shroder’s departure was amicable and that he had achieved everything he had set out to do.
“Ignore the FUD,” was the call from the parapets, the common plea for calm when any kind of disruption occurs.
In an industry strained and battered by tales of fraud and wrongdoing, however, this call went unheeded once again. The days since the news broke have seen significant outflows from Binance to platforms such as Jump, AU21 Capital, QCP Capital and Wintermute.
Once again, it raises issues that have long dogged the cryptosphere, chiefly those of influence and trust. There are few other sectors where layoffs or a change at the top of a company can have such an impact.
Such things are generally accepted as the natural ebb and flow of the business world, and while there may be a momentary blip, more often than not, things are back on track fairly soon afterward.
Even in this instance, from the chart, it is apparent that there were still sizeable inflows to Binance during the period. The two incidents may be completely unrelated. With so many factors involved, no one can say for sure.
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Jim Graham, a cryptocurrency analyst at think tank PsyBold, told Cointelegraph: “While we can’t attribute the shift in funds wholly to last week’s announcement, we most certainly can’t reject it, either. There have been several key managerial changes in the past few months, and virtually all of them have been accompanied by a dip in holdings on the platform. Trust remains a massive obstacle for crypto platforms, and it’s an obstacle they are failing to overcome.”
Money is a valuable commodity, and even the hint that it may be in jeopardy is reason enough to react quickly and decisively.
As the saying goes, trust is earned, not given away, and the recent negative events involving crypto platforms have done little to raise that level of trust. Graham added:
“Crypto platforms need to be on par with banks regarding trust. Investors need to know that entrusting their money to them is a good, safe idea, not a risky one. Unfortunately, they are nowhere near that, and until we reach that level, these spikes are inevitable.”
So, how do the platforms get to that level of trust? Most people would simply say, stop doing bad things. Once crypto platforms act more like banks, people may trust them more.
But this is much easier said than done. For one, most banks have been around for years, some even hundreds of years. Trust has an element of longevity to it, which people like. The general feeling is if something or someone has acted responsibly and transparently for a long time, there is more of a chance that they will continue to do so.
Crypto platforms don’t have that luxury, of course. Most can only look back on a few years of existence; the only pledge they can give is their word.
On top of that, there is the age-old discussion of regulation. Licensed banks are regulated. That means an authority monitors what they do and is there to step in if things go wrong.
The last thing such an authority or the bank wants is a bank run, as this represents a complete breakdown in trust for all concerned, with the consequences that go with that. Once that has happened, it is tough to win that trust back, as witnessed during the economic crisis of 2008.
In the unregulated world of crypto exchanges, there is currently a stalemate. Some investors are in the middle, clamoring for regulation, fearing for their investments. In contrast, others are vehemently opposed, stating regulation is the very thing cryptocurrency was created to avoid.
And on either side are the exchanges and the authorities, each accusing the other of this and that in what seems like an endless spiral, with neither ready to back down.Sandra McAllister, an attorney specializing in tech litigation with Clifford Chance, told Cointelegraph:
“The need to clarify the legalities around trading cryptocurrencies, particularly in the U.S., is vitally important for the future of the industry, but the protracted processes and tactics being employed are damaging, for both sides, and that, in turn, is turning investors away.”
“The power of social media is also a pressure on the market. The bounce in the Ripple price we saw in July following the court ruling on XRP underlines that perfectly. The decision was anything but conclusive and, in reality, nothing more than a step along the path, but it was blown up on social media as a huge victory that drove up prices. We only have to see where the Ripple price is today to see how much of a victory it actually was,” she said.
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Moving assets around between different exchanges or different assets is nothing new or unusual, of course. In times of economic downturn, funds tend to flow toward the “safer” havens, such as bonds and gold, before reverting to more profitable areas when things pick up.
Graham commented, “While diversifying holdings and being ready to react to ensure you are not unduly affected by negative pressures is sound financial advice, the problem facing crypto holders right now is which platform is safer than another. The FTX demise showed us that ‘too big to fail’ does not apply, so what remains?”
Ethereum’s price metrics are flashing signals that suggest that the long-awaited altcoin season (altseason) may be around the corner.
According to a report by the market analytics platform CryptoQuant, the relative price of ether (ETH) compared to bitcoin (BTC) may have seen the bottom for this cycle. Previously, such low levels have been followed by periods where ETH significantly outperformed BTC, triggering a broader altcoin rally.
ETH Recovers From Undervalued Zone
In the last seven days, the ETH/BTC price ratio has surged 38% from its lowest level since January 2020. The current price ratio has been historically associated with ETH price bottoms, which have preceded altseasons. Still, the metric needs to rally above its 365-day moving average before ETH can record a new and sustainable leg against BTC.
To substantiate the possibility of a strong mean-reversion potential, CryptoQuant pointed out that ETH recently dipped into an extreme undervalued zone relative to BTC. This was evident in the ETH/BTC Market Value to Realized Value ratio, which plunged to its lowest level for the first time since 2019.
Similar cases of an MVRV ratio dip recorded in 2017, 2018, and 2019 were followed by periods where ETH outperformed BTC.
ETH Sees Bullish Signals
Recently, ether’s price has been on a positive trajectory, and this performance has coincided with higher spot trading volume relative to BTC. The ratio of ether’s spot trading volume relative to BTC rose last week to 0.89, a level not seen since August 2024. This signalled that market participants increased their exposure to ETH compared to Bitcoin.
CryptoQuant mentioned that traders’ increased exposure to ETH compared to BTC has also happened from 2019 to 2021, during which ETH outperformed BTC by 4x. Ether’s spot trading volume has also begun to grow faster than bitcoin’s, indicating higher demand for the second-largest crypto asset.
Furthermore, investors also favor ETH through their allocations to exchange-traded funds (ETFs). Higher ETH purchases have triggered a spike in the ETF holdings ratio since late April.
“The growing ETH allocation likely reflects expectations of relative outperformance, possibly driven by catalysts such as recent scaling upgrades or a more favorable macro environment,” CryptoQuant explained.
Additionally, ETH is seeing lower sell pressure relative to BTC, as seen in exchange inflow data. The exchange inflow ratio has fallen to its lowest level since 2020, indicating that ETH is facing significantly lower selling pressure than BTC. This has always been a bullish signal for ETH, supporting further gains for the cryptocurrency.
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Bitcoin (BTC) is holding steady at around $103,000, but the calm could be the eye of the storm.
With volatility compressing and the CME gap still looming like a ghost at $91,970, crypto analysts are torn on whether BTC is headed for glory at $175,000 or prepping for a brutal fakeout.
The Bull Case: $175K or Bust?
Egrag Crypto isn’t mincing words. In a recent X post, the analyst, more well-known for his takes on XRP, proclaimed that Bitcoin going to $175,000 was “Solid as a Rock!” According to him, that price region is BTC’s “cycle top,” referencing historical EMA breakouts and a 10X extension from 2017’s $20,000 peak.
The crypto trader pointed out that, in the past, Bitcoin pumped hard whenever it closed above the 21-week EMA. His breakdown: Pump 1, 60%; pump 2, 170%; pump 3, 75%. That’s an average jump of 101%, which Egrag applied directly to the market’s post-April 21 momentum to reach the $175,000 price level. “Men lie, women lie, numbers don’t,” he quipped.
However, not everyone is dancing. Investor Daan Crypto Trades is painting a sobering picture of weekend stagnation and low volatility, with BTC locked in a tight $101,000 to $105,000 range. “We won’t see that much action from Bitcoin for now,” he shrugged, citing low liquidity over the weekend and a possible breakout looming.
The Bearish Wrinkles
Still, an unfilled CME gap between $91,970 and $92,520 feels like the real twist. Some traders believe BTC must revisit this zone before any meaningful climb can happen.
“From the current price, BTC would need to drop around 12% to close this gap,” Egrag Crypto wrote. However, he predicted there was more likelihood of a rally through the $130,000 to $140,000 Fibonacci levels before a 33% correction, followed by a final push to his fabled $175,000.
At the time of this writing, BTC was still 4.9% below its all-time high set in January. Its latest price represents a slight 0.4% dip in the last seven days, but it has still outperformed the broader crypto market’s 1.6% drop in the same period.
The next move is critical: will the flagship crypto blast off to $175,000 as the permabulls promise, or will the CME gap drag it down first?
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The on-chain intelligence platform CryptoQuant has unveiled a framework for monitoring the revenues of leading public Bitcoin mining companies. This methodology tells whether the companies are undervalued or overvalued in real time.
CryptoQuant revealed in its latest weekly report that the framework tracks miners’ addresses on the Bitcoin blockchain and their BTC production. This enables analysts to derive revenue metrics not disclosed via traditional corporate procedures.
The Valuation Methodology
The Bitcoin mining companies monitored through CryptoQuant’s framework include Marathon Digital (MARA), Riot Blockchain (RIOT), and Core Scientific (CORZ). The analytics firm also tracked the revenue metrics of Hive Digital Technologies (HIVE), CleanSpark (CLSK), Bitfarms (BITF), TeraWulf Inc. (WULF), Cipher Mining (CIPHER), and IREN (IREN), formerly Iris Energy.
According to the report, CryptoQuant analysts estimated daily mining revenues directly from block rewards and transaction fees by tracking miner addresses. The revenue estimates are annualized and compared to the mining firms’ market cap. From there, the analysts offer a forward-looking valuation framework similar to a price-to-sales ratio. CryptoQuant calls this the Market Cap to Annualized Daily Revenues (MCAR) ratio.
The MCAR ratio tells whether a miner’s underlying Bitcoin production or USD-denominated revenue supports the company’s valuation.
“By comparing each company’s market capitalization to its annualized revenue on a daily basis, investors can identify which firms are potentially overvalued or undervalued. This enables more informed portfolio allocation—favoring companies whose market valuations lag behind their revenue generation while reducing exposure to those trading at excessive premiums,” CryptoQuant stated.
WULF and MARA Valued at Relative Premiums
From CryptoQuant’s analysis, the MCAR ratios for WULF, MARA, RIOT, CLSK, HIVE, and IREN are 5.1, 4.4, 3.7, 3.3, 1.9, and 1.8, respectively. These numbers reflect how much investors pay for every dollar of estimated annual revenue in real time.
WULF and MARA have the highest valuation multiples, so CryptoQuant believes they are priced at a significant premium compared to the other firms. RIOT, CLSK, and HIVE are not as overvalued, so their market valuations hover within the same range as their revenue generation.
CryptoQuant found that IREN has the lowest valuation despite posting strong growth in its BTC production. This suggests that the company is likely undervalued by the market. On the brighter side, the firm faces a potential upside if it becomes repriced in the market.
“The current valuation dispersion opens opportunities for relative value strategies by identifying firms like IREN that may be lagging in market recognition despite solid operational performance,” the analytics firm added.
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