Top Crypto News: Binance Proof of Reserves published, can metrics prove the firm’s health? 

Bitcoin prices fall drastically past one month.

The top crypto asset BTC has been hitting rock bottom for the past one month. Experts believe that the Fed Reserve may not give any respite from the high interest rates. Fed has increased the interest rate by half a point. Further, they also added that there will be another round of interest rate hike in 2023. Bitcoin traded at $ 16711 at the time of writing.

Source: TradingView

The crypto market has been witnessing a bloodbath since Terra Luna and later the recent FTX collapse that everyone witnessed. If this wasn’t enough Powell’s strong dominance on the interest rates have further weakened the crypto market’s sentiments. The Fed Chair has tightened the monetary conditions by increasing the interest rate 4 times this year and has signaled that it may continue even in 2023. 

“While volatility-crushing fatigue has set in as the Christmas/New year interval approaches, markets will no doubt have to react to this in a bearish way, either with a slow bleed into year-end, or with another January/Q1 sell-off like we saw this year, -QCP Capital –  crypto trading firm commented on December 17 on Telegram.  

Additional Read: FOMC, Inflation and Crypto: Deciphering what the Fed’s latest rate hike could mean for cryptos

Update on Binance Proof of Reserves 

Binance published its Proof of Reserves report on November 25, 2022. According to CryptoQuant’s audit there was no FTX like behavior in Binance’s balance sheet.  

“Our analysis should not be interpreted as a favourable opinion of Binance as a company, the ecosystem of the BSC/BNB networks, or the BNB token. It is merely a sign that the amount of BTC that Binance exchange  holds as liabilities at the moment, Crypto Quant reported. 

However , according to Glassnode the lack of activity on the exchange post the FTX collapse has created much FUD into the crypto world. 

Crypto auditing firm Mazars has paused its work for all crypto clients. The firm removed its assessment conducted for Binance which reported over collateralization of Bitcoin reserves. Reports including proof of reserves without proof of liabilities won’t bring a transparent picture of the exchange. After Mazars published that it will be pausing work for its clients including Binance, Kucoin, which resulted in the prices of these exchange tokens dipping slightly. 

Mazars said in an emailed statement that it had only paused its work for crypto firms relating to proof-of-reserves reports. “This is due to concerns regarding the way these reports are understood by the public,” the firm added. 

The firm also found Kucoin’s crypto assets to be over collateralized. 

What proofs could help reinstill users’ faith in an exchange?

There is a far more interesting and important metric that can be covered through on chain data that Mazars may not be able to include. It is the quality of reserves. According to experts, the exchange’s token reserves indicator could be an excellent metric to measure. Binance’s native token seemed to be in place as opposed to the BNB rumor that caused panic in the minds of crypto investors. According to CryptoQuant’s report Binance’s reserves are 89% clean. 

Additional Read: What is Proof of Reserve exactly and why is everyone talking about it?

Source: CoinDesk