Binance Targeted For Alleged Market Manipulation

The Bitcoin price has experienced a notable downturn, with the market’s largest cryptocurrency retracting 8% in the monthly time frame. This decline has sparked significant criticism on social media, particularly against the crypto exchange Binance, which some investors accuse of contributing to the current market slump.

Binance Behind The Bitcoin Price Slump?

Market analyst DeFitracer shared insights on social media site X (formerly Twitter), questioning why the market is experiencing a sell-off despite what he describes as an oversaturation of positive catalysts. 

These include record inflows into crypto exchange-traded funds (ETFs) and anticipated interest rate cuts by the Federal Reserve (Fed) anticipated for next month. Yet, he points out, “we’re still dumping—why?”

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According to DeFitracer, the ongoing sell-offs appear to be orchestrated by Binance, which he claims is using a third party, market maker Wintermute, to execute its trades. 

This strategy, he argues, is designed to set a bearish trend that retail investors follow, ultimately benefiting Binance through profits from futures liquidations. In fact, 2024 saw $344 million liquidated in a single day on the exchange, and current market manipulations may yield similar results, he asserts.

As of press time, the market’s leading cryptocurrency trades at $108,295, meaning a 12% retrace from all-time high (ATH) levels of $124,000 reached earlier in the month. 

Three-Phase Reaction To Crypto Sell-Off

DeFitracer also highlighted significant activity surrounding Solana (SOL). The analyst indicates that beyond Bitcoin, Binance has also been offloading SOL, potentially driven by an alleged desire to curb competition with its own token, Binance Coin (BNB), which currently has a market cap of $117 billion compared to SOL’s $102 billion. 

The analyst also said in his analysis that this activity raises questions about where Binance is sourcing its Solana, as their proof-of-reserves only shows client funds, suggesting that customer assets might be at risk in these trading maneuvers.

DeFitracer added that these movements echo the practices of collapsed exchanges like FTX, which similarly utilized client funds through its trading arm Alameda Research: 

This is a terrible look for the exchange. User funds should stay safe – not be used for market games. FTX pulled the same move with client funds through Alameda Research. We all know how that ended

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While the current market conditions may seem daunting, DeFitracer outlines a potential three-phase market reaction: an initial phase of panic leading to retail exits, followed by accumulation during the downturn, and finally, a sharp rebound. 

He emphasizes that the upcoming rate cuts by the US Federal Reserve next month could significantly shift the market sentiment, recalling how similar cuts in 2021 triggered a massive bull run, propelling the Bitcoin price to new heights.

Featured image from DALL-E, chart from TradingView.com