Would Bitcoin Be Badly Hurt if Binance Goes Down?

[Blitzboy]

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Normal volatility is a little bit different to a large centralized exchange (or in the case of Binance, one of the largest crypto institutions that are still operating) being forced to close operations.

If Binance were to be closed, positions will be cancelled, not liquidated. In an ethically fine event, everyone can withdraw and the exchange will store or sell the excess...maybe, the price won't be drastically effected by this. However, that is a very idealistic view.

It has been reported that Binance have less reserves than exchange balances...this could mean five outcomes:
1. Binance somehow find the difference, buy crypto and allow the balances to be withdrawn.
2. Binance find a way to close without 100% of balances being able to be redeemed. Likely by selling, causing a market catastrophe, buying the difference.
3. Completely liquidating all crypto and paying everyone a share of the proceeds based on their percentage of total exchange balances.
4. Liquidating everything for fiat, strict withdrawal process and buying only when needed to process withdrawals.
5. Everyone gets BNB, all assets migrate to BNB, all reserves injected into BNB.

All seem unlikely, all are possible in the event Binance stop normal operations and need to close. One thing is for sure, it will cause unprecedented waves in the market.

While its fun to imagine such dramatic situations, I think any shutdown would need to be managed carefully and professionally. I prefer your third and fourth scenarios as a crypto-enthusiast who values due process.

First, selling all crypto assets and distributing the money depending on users' portion of overall balances seems fair. Due of its volume, it can cause a major market decline.

To circumvent this, liquidate assets for fiat, institute a tight withdrawal process, and buy only when needed. They assure market stability and user share this way.

Regardless of the outcome, the market would shake. However, it must be handled wisely to ensure user fairness and market stability.

[Minhxx]

In your opinion, a famous person will have an inert influence on the market. Take a look at FTX, it was the collapse of a major exchange, it caused bitcoin to plummet from 69k =>> 15k

[yudi09]

I really am no fan of Binance because I found their KYC annoying.

KYC is indeed very disruptive.
The impact will be because Binance is currently a large exchange with a large transaction rate.
In general, we can judge from the FTX case that it can have an impact, let alone happen to Binance.

How much harm do you think a Binance implosion would cause Bitcoin? Is the US a big threat to the coin market?

America is not alone, there are several other countries that are players that could be a threat to the coin market including China.
Market control will always be attempted to be done but the goal in my opinion is more for their profit not to destroy crypto.

One thing that I think is important is that Bitcoin will still exist if Binance one day disappears.

[onecall123]

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First, selling all crypto assets and distributing the money depending on users' portion of overall balances seems fair. Due of its volume, it can cause a major market decline.

To circumvent this, liquidate assets for fiat, institute a tight withdrawal process, and buy only when needed. They assure market stability and user share this way.

Regardless of the outcome, the market would shake. However, it must be handled wisely to ensure user fairness and market stability.

Because of big liquidity in the market it'll definitely lead a significant decline.

If Binance shutting down, it would have a potential negative impact that could affect the entire cryptocurrency ecosystem. Talking about recovering from this situation would require a combination efforts from different stakeholders involved in cryptocurrencies.

However, getting a full recovery and restoring market stability would be a gradual process with significant time.

[Gallar]

I really am no fan of Binance because I found their KYC annoying. What is not in doubt is that CZ is supposedly one of the most credible faces of crypto. How much harm do you think a Binance implosion would cause Bitcoin?

The implementation of KYC that is enforced on the Binance exchange is indeed a bit disturbing for some investors in the crypto sector. Because it's all about the real identity of the user, and that's what makes binance a little bit annoying among crypto investors. But even so, Binance has so far managed to become the number one crypto exchange in the world, and this is enough to prove that Binance is an exchange that can be considered safe and can be trusted.

But with the recent incidents, Binance's reputation among its users has dropped a little. So you could say that Binance is currently in a precarious state. Because if CZ and his colleagues are proven to have committed a criminal act as stated. It is certain that binance will be destroyed and its use will be blurred. That way it will automatically disrupt the crypto market and including bitcoin too.

And when it comes to the losses that will befall bitcoin assets resulting from the collapse of binance(for example). In my opinion, it might be a little big, if only the users on binance don't quickly withdraw the bitcoin assets they have into their personal wallets. Because if this is not done, it is feared that the assets of those who own them will be stuck on the Binance exchange. But if for example the majority of users on Binance withdraw the assets they have, maybe the loss will not be too big.

[KiaKia]

Binance exchange just turned the best when? There are bigger crypto exchanges before the Binance exchange and they went down, today Bitcoin is still standing strong.

Even if Binance exchange grows in three folds of what it is today, it doesn't concern Bitcoin and moreover, Bitcoin was never created for centralized exchanges, it's the investors that decide to dance to the tone of centralized exchanges, and it's not anyone's business, it means they are ready to take responsibility if anything goes wrong.

There are many crypto investors from America that's why the country plays a major role in crypto investment, it won't make much sense if the US is left out of crypto, this is why I don't like what is going on with the SEC right now.

[Sayeds56]

I really am no fan of Binance because I found their KYC annoying. What is not in doubt is that CZ is supposedly one of the most credible faces of crypto. How much harm do you think a Binance implosion would cause Bitcoin? Is the US a big threat to the coin market?

https://www.cryptoinfowatch.com/a-former-sec-official-said-the-binance-ceo-and-others-may-face-criminal-charges-soon/

Indeed, going through KYC process on Binance is annoying as it entails potential privacy risk. However, this requirement is imposed by the countries in which exchanges operate and it is often a legal requirement of local institutions. Despite this inconvenience ,Binance has played a vital role for the promotion, growth and adoption of crypto currencies all over the world.. If Binance were to face shutdown down, I believe it will badly hurt crypto currency market from short to medium term. However Bitcoin has inherent strength and resilience to survive from such crisis. Eventually it will resume its normal behavior and become stable overtime.

[irhact]

And when it comes to the losses that will befall bitcoin assets resulting from the collapse of binance(for example). In my opinion, it might be a little big, if only the users on binance don't quickly withdraw the bitcoin assets they have into their personal wallets. Because if this is not done, it is feared that the assets of those who own them will be stuck on the Binance exchange. But if for example the majority of users on Binance withdraw the assets they have, maybe the loss will not be too big.

Binance exchange will follow the steps of Bittrex exchange as they'll allow users to withdraw all their Bitcoin and other cryptocurency on the exchange before they closed down finally, Binance exchange is a reputable exchange and CZ is a very host human being and won't be as cold as Sam Bankman-Fried was therefore we shouldn't be worried about users losing their coins on the exchange although it isn't wise and safe to keep your coins on exchanges.

If Binance exchange was to collapse it'll affect the market generally and Bitcoin will be affected. When FTX collapse it had its impact on the market and that's because FTX was a big exchange and people got scared which is the same thing that'll happen if Binance goes down.