Bitcoin Drops 3% to $78,177 as Billions Leave Binance Hot Wallets

Bitcoin fell about 3% in 45 minutes Thursday, from near $80,740 at 3:55 p.m. ET to a low of $78,177 at 4:45 p.m. on Coinbase, as billions of dollars flowed out of Binance hot wallets. It traded near $79,100 at 6:25 p.m., down 2.5% in 24 hours, per CoinGecko.

The timeline

The first transfers out of a wallet Etherscan labels Binance 14 landed at 4:24 p.m. ET, Unchained reported. The sharpest bitcoin candles printed in the 20 minutes after that, Coinbase price data show. Binance said at 5:29 p.m. that "user funds are completely safe." Bitcoin had already slipped about 0.5% in the 4 p.m. candle, before the transfers, so not all of the drop lines up.

Update, 7:50 p.m. ET: Binance has since paused withdrawals on multiple networks, TechCrunch reported. It says $2.54 billion is frozen, with law enforcement helping. Trackers Lookonchain and Arkham allege $5.7 billion to $5.8 billion was taken. Binance has not confirmed a loss or called it a hack.

How a small drop turned into a fast one

Many traders borrow to make bigger bets on futures. If the price moves far enough against them, the exchange sells their position by force. That is a liquidation, and each forced sale can push the price lower and trip the next one. Coinglass data counted $627.7 million in liquidations in one hour, 97% of it on bets that prices would rise, BeInCrypto reported. The largest was an $11.09 million bitcoin long on Binance at $79,254, which SwoleCharts also logged at 4:42 p.m. ET.

Who took the biggest hit

BNB, Binance's own token, fell about 9% from 4 p.m. to its low near $678, OKX data show. Ether fell about 4.4% to near $2,233. Tether said it froze more than 1.567 billion USDT, and Circle froze about 823 million USDC, Unchained reported.

The market was soft before the outflows. Bitcoin dipped under $80,000 late Wednesday after the Fed held rates, and options on about $10.8 billion of bitcoin expire Friday at 4 a.m. ET on Deribit.

In our opinion: the clock points at Binance. The selling started within minutes of the outflows, and the coin most tied to Binance fell three times as hard as bitcoin. The macro news set a weak floor, but it didn't light the fuse. Watch for Binance's next official update, and for whether bitcoin holds $78,000 through Friday's 4 a.m. expiry.