Binance FUD Continues As Experts Warn Of Serious Fallouts

Binance rumors were the all-dominant topic last week after the FOMC meeting. Rumors of insufficient proof of reserves and the pullback from accounting firm Mazars, allegations of a bank run and insolvency, as well as CZ’s interview on CNBC have dragged the Bitcoin and crypto sentiment and prices down.

Charles Edwards of Capriole Investments pointed out in a Twitter thread that this “FUD is really bad for the industry,” pointing out that there is “nothing” backed by data that is legitimately worrisome, “but when fear is great enough, it doesn’t matter.”

“If current withdrawal rates continue, expect more exchanges to go down – not from poor practices – but bankruptcy,” Edwards contended.

Is The Binance FUD “Thinly Veiled Xenophobia”?

The analyst suggests that all exchanges are being hit extremely hard by current market conditions. They have to deal with a price drop of more than 80%, a drop in trading volumes of more than 90% and a reduction of reserves by more than 50% “due to irrational panic.”

As Edwards analyzes, even the U.S. exchanges Coinbase, Gemini and Kraken have been hit badly. They are currently experiencing a 60% drop in their Bitcoin reserves over the past year.

Addressing Bitcoin maxis, in particular, Edwards said:

I love Bitcoin. But the maxis screaming for cold storage only, don’t realize that if everyone actually went to cold storage, your precious Bitcoin price would approach $0. Influencers spreading FUD are literally damaging the industry & their net worth just to pump engagement.

At the same time, Edwards emphasized that his opinion on Bitcoin has not changed. He said the current price movement is largely fueled by panic. Still, Edwards spoke from the heart of many crypto enthusiasts when he turned to Changpeng Zhao and said:

And CZ, let’s stop dilly dallying and put this issue to bed with a _real_ audit.

Edwards was joined by market analyst Alex Kruger, who denounced the people who view bank runs as healthy stress tests. Those people “clearly haven’t thought this through. When funds leave, trading activity diminishes, and so do trading fees. And then, many funds never come back.”

Ryan Selkis, the founder of Messari, claimed much of the Binance FUD is “thinly veiled xenophobia.” Selkis also added: “I’m all for the stress test on deposits and think it’s bad that such a high percentage of volumes runs through a single exchange. I also…