Cryptocurrency exchange Binance has added $300 million worth of Bitcoin to its user protection fund this week, increasing its Bitcoin holdings amid a broader market downturn. The purchase is part of a planned shift to convert the $1 billion Secure Asset Fund for Users (SAFU) entirely into Bitcoin. Market sentiment remains fragile as top traders continue to bet on further price declines.
Binance purchased an additional 4,225 Bitcoin, valued at $300 million, for its emergency user reserve fund on Monday. This acquisition brings the fund’s total Bitcoin holdings to over $720 million at current prices, according to blockchain data platform Arkham. The exchange stated it is continuing its plan to convert the fund within 30 days of its original January announcement.
The move signals confidence in Bitcoin but exposes the fund to the asset’s price volatility. Binance first announced shifting $1 billion of its user protection fund into Bitcoin on Jan. 30, framing it as a conviction in Bitcoin’s long-term prospects. The exchange committed to rebalancing the fund back up to $1 billion if market volatility drove its value below $800 million.
This fund conversion occurs during a wider crypto market correction. Bitcoin’s price sank to $59,930 on Friday, a level last seen in October 2024, according to TradingView data. Hina Sattar Joshi, director for digital assets at TP ICAP, told Cointelegraph that Bitcoin investor sentiment remains “fragile,” threatening more downside.
“Sentiment is currently very fragile, with investors anchoring themselves to the traditional four-year Bitcoin cycle, in which Bitcoin’s price historically follows a recurring pattern of ‘boom and bust,’” Joshi stated. Meanwhile, the industry’s top traders, tracked as “smart money,” continue betting on further market declines.
According to crypto intelligence platform Nansen, smart money traders added $7.38 million worth of leveraged short positions and were net short on Bitcoin for a cumulative $109 million. These traders were betting against most leading cryptocurrencies, with Avalanche (AVAX) being a notable exception, holding $7.38 million in cumulative long positions.
