Huobi Global sees sharp drop in inflows- Is danger lurking around the corner

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  • The net inflows into Huo­bi Glob­al dropped on a 24-hour, week­ly as well as month­ly basis.
  • At press time, Huo­bi Token slid 30% on a month-to-date (MTD) basis. 

Justin Sun recent­ly trans­ferred 5,250 Arbi­trum [ARB] tokens which he received as part of an air­drop, to Huo­bi Glob­al, where he is an advisor.

While it was not clear whether this was done to shore up liq­uid­i­ty in the pop­u­lar cryp­tocur­ren­cy exchange, data com­ing from DeFiLla­ma was alarming.

The net inflows into the exchange dropped on a 24-hour, week­ly as well as month­ly basis.

Reserves signal an alarming trend

After the Unit­ed States Secu­ri­ties and Exchanges Com­mis­sion (SEC) ini­ti­at­ed a probe against Tron [TRX] founder Justin Sun, the focus shift­ed to Huo­bi Glob­al, which is part of the ecosystem.

A look at the breakup of the exchange reserves dis­closed that TRX account­ed for 18.5% of the share. On the oth­er hand, 23% of the reserves were held in Huo­bi Token [HT], the native coin of the exchange.

Source: DeFiLla­ma

The total reserves on the CEX were $3.08 bil­lion, as per DeFiLla­ma. How­ev­er, if the native coins of the ecosys­tem like TRX and HT were exclud­ed, the remain­ing val­ue, also known as clean assets, was just $1.8 bil­lion. The clean reserve ratio in this case was 58%.

It should be not­ed that if only the HT token was con­sid­ered, the clean reserves stood at $2.37 bil­lion, tak­ing the clean reserve ratio to over 76%.

Inci­dents like the FTX col­lapse height­ened fears around the dom­i­nance of native coins on the bal­ance sheet of the exchanges. To allay the fears of investors and main­tain trans­paren­cy, exchanges start­ed pub­lish­ing their proof-of-reserves after the incident.

HT in darkness?

Mean­while, HT slid 30% on a month-to-date (MTD) basis, per data from Coin­Mar­ket­Cap. At press time, it exchanged hands at $3.6671. The coin sent shock­waves in the cryp­to space ear­li­er this month when it flash-crashed by over 60% on 9 March.

As per data sourced from San­ti­ment, the num­ber of new address­es being cre­at­ed across the net­work tum­bled since the flash crash, indi­cat­ing that users were not very keen to trade HT.

The sup­ply on exchanges also wit­nessed a steep decline since the event, as users may have offloaded their hold­ings owing to liq­uid­i­ty con­cerns in the exchange.

The neg­a­tive 30-day MVRV Ratio implied that most hold­ers would incur loss­es if they were to sell their coins. A gloom engulfed the net­work as the weight­ed sen­ti­ment was also negative.

Source: San­ti­ment

Well, Huo­bi Glob­al recent­ly announced that it was in the process of apply­ing for a trad­ing license in Hong Kong, fol­low­ing the region’s plan to allow retail investors to trade in pop­u­lar cryptocurrencies.

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