According to on-chain data from CryptoQuant, a large amount of Bitcoin (BTC) has been transferred from Binance, the world’s largest cryptocurrency exchange by trading volume, to Coinbase, one of the leading US-based platforms. The move suggests that investors are anticipating the approval of a spot Bitcoin exchange-traded fund (ETF) in the US, which could boost the demand and price of the leading cryptocurrency.
CryptoQuant reported that since yesterday, Coinbase’s reserves have increased by around 12,000 BTC, while Binance’s have decreased by 5,000 BTC. The research firm wrote in a recent note that the decrease in Bitcoin reserves on Binance appears to be due to retail outflows, as the market is still nervous about the recent legal implications against Binance.
Investors Shift BTC to Coinbase in Expectation of Spot ETF Green Light
Binance has faced regulatory scrutiny and pressure from several jurisdictions, including the US, UK, Japan, and Singapore, over its compliance and licensing issues. The exchange has also recently settled with the US Department of Justice for $4 billion over allegations of violating the Bank Secrecy Act and aiding and abetting money laundering.
Coinbase, on the other hand, has stood the test of time as a compliant and licensed platform in the US, where it also went public earlier this year. Coinbase has specific wallet features and custody options, available to clients, that users may find appealing over Binance.
Some analysts say that Binance’s settlement with the US authorities was the last hurdle to getting approval for a spot Bitcoin ETF, which would allow investors to buy and sell Bitcoin directly through a regulated entity. So far, the US Securities and Exchange Commission (SEC) has only approved Bitcoin futures ETFs, which track the price of Bitcoin futures contracts rather than the underlying asset.
CryptoQuant identified a 1,000 BTC withdrawal from Coinbase, and suggested the transaction was an “institutional over-the-counter (OTC) trade and can be seen as anticipation of approval of ETFs.” OTC trades are usually done by large investors who want to avoid slippage and market impact by trading directly with each other.
The approval of a spot Bitcoin ETF could be a game-changer for the crypto industry, as it would provide more liquidity, accessibility, and legitimacy to the market. It could also attract more institutional and retail investors, who would benefit from the lower fees, higher security, and tax advantages of holding Bitcoin through an ETF.