Investors Respond Differently to SEC’s Regulatory Scrutiny: Report

• According to Glassnode, there is an interesting divergence in investors’ behavior.
• Transactions below $10M in size have seen consistent withdrawals.
• However, transactions above $10M have seen consistent deposits.

According to the blockchain data platform Glassnode, there is an interesting divergence in investors’ behavior. The analytics platform reveals transactions below $10M in size have seen consistent withdrawals. The net outflow over the past week is over $130M/day.

Glassnode also shows transactions above $10M have seen consistent deposits, with inflow rates ranging between $15M and $30M/day. That suggests that large entities, such as institutions, are more affected to a greater extent by SEC news as compared to smaller entities.

Although Glassnode has observed the newly developing trend, its sustainability is still under confirmation.

The US regulatory environment recently escalated its scrutiny of the crypto industry. The Securities and Exchange Commission (SEC) filed lawsuits against Coinbase and Binance. Also affected are several crypto projects whose tokens the SEC flagged as securities. Several of those projects have denied the SEC’s allegation, insisting their tokens are not securities.

Glassnode’s data shows investors embarked on a withdrawal spree after the SEC’s case against Binance became public. Last week, investors withdrew over $1.6 billion in stablecoins from Binance, equivalent to 20.9% of the total Binance balance. They also pulled out about 5.7% and 7.1% of their funds in BTC and ETH, respectively.

The Coinbase experience is less dramatic, as investors withdrew about 2,300 BTC and 291,000 ETH from the crypto exchange. The large ETH withdrawal on Coinbase links to the platform’s staking services, which the SEC has called under scrutiny.

The SEC’s lawsuit against Coinbase and Binance is in the early stages, with no specified timeline for development yet. However, Glassnode’s data suggests the observed panic is common to smaller investors. Institutional investors are still making deposits on the affected crypto exchanges.