Binance Liquidates Bitcoin Reserves Amid Market Shifts

At the start of January, Binance held 46,896 BTC but liquidated over 94% of these holdings, leaving just 2,747 BTC. The exchange also converted a significant portion of its Ethereum (ETH) and Solana (SOL) holdings into USD Coin (USDC) while retaining most of its Binance Coin (BNB) holdings, selling only 16%.

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Binance’s Corporate Reserves Decline

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Binance does not report corporate reserves separately; instead, these funds are included in the exchange’s excess reserves, closely tied to customer funds. These reserves do not account for cash, cash-like assets, or smaller holdings outside the proof of reserves framework. The latest data reveals that Binance now holds the smallest excess corporate reserves in two years.

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The exact asset allocation remains unknown, as funds may be redistributed to other wallets, reinvested, or reallocated. Binance has yet to comment on whether any of these funds have been used to cover outstanding fines or other financial obligations.

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New Proof of Reserves and Liquidity Levels

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Following these liquidations, Binance released updated proof-of-reserves data. The exchange is currently 100.45% liquid for BTC reserves, a decline from a previous margin of 108%. Some of the BTC accrued through trading and fees has since been moved.

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In early 2025, Binance held 622,192 BTC across custodial services and hot wallets. By February, the reserves had dropped to 618,653 BTC, with customer net balances accounting for 615,816 BTC. This decline results from both asset sales and an increase in user liabilities, impacting the reserve ratio.

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Most of Binance’s reserves have minimal excess holdings, with the exception of USDC, where it holds 141% of user claims. USDC’s growing adoption, especially in the Euro area, reflects a broader market trend favoring regulated and transparent stablecoins over USDT, which faces increasing scrutiny from European brokerages.

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The proof-of-reserves methodology estimates Binance’s personal or excess holdings by subtracting user balances from the total available assets. While the exchange technically only needs to hold 100% of user balances, it previously maintained a significant surplus, which has now diminished.

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Market Impact and Investor Sentiment

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Markelitics analysts note that Binance’s recent liquidations suggest strategic profit-taking, potentially at the market’s peak. The exchange has sold approximately $8 billion of its $14 billion in excess assets, fueling speculation that it played a role in January’s market weakness, particularly for Ethereum.

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Despite promising monthly proof-of-reserves updates, Binance is not obligated to maintain a set level of excess reserves. Its shift from BTC and blue-chip crypto assets into stablecoins signals a strategy of selling at high prices, with the possibility of re-entering the market at lower valuations.

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These changes coincide with a cooling-off period following the late 2024 bull market, with traders adjusting allocations across multiple chains. Binance increased its holdings on BNB Smart Chain while maintaining significant Ethereum-based assets. However, investor sentiment has led to reduced exposure to Polygon, Arbitrum, and other smaller chains.

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Significant outflows were observed from Arbitrum-based tokens, with Binance now holding negligible amounts of these assets. It’s important to note that not all Binance-held funds are included in its proof of reserves. The exchange only discloses on-chain data for 34 major assets.

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