Binance Acquires $100M Bitcoin During Dip, Initiating $1B SAFU Conversion

Binance completed its first purchase of $100 million in Bitcoin for its SAFU fund on February 2, acquiring 1,350 BTC at around $77,873 each. This action is part of a broader $1 billion SAFU fund conversion plan announced on January 30, aimed at restoring community confidence after a significant liquidation event in October. Despite Bitcoin's recent struggles below the $80,000 mark, Binance's investment indicates confidence in the asset's recovery.

Key Takeaways

Purchase Details: Binance bought 1,350 BTC for $100 million as part of a $1 billion SAFU fund conversion.
Market Context: Bitcoin trades below $80,000, impacting U.S. Bitcoin ETFs, which are experiencing underwater positions.
Industry Dispute: OKX founder attributes crash to Binance’s marketing; others refute this by highlighting differing price actions.
Market Sentiment: Analysts predict bearish trends for Bitcoin, with potential lows projected between $56,000 and $60,000.

Binance Buys $100M Bitcoin Dip, Kicking Off $1B SAFU Conversion

Binance's $100M Bitcoin Purchase

On February 2, Binance executed a $100 million Bitcoin purchase for its SAFU (Secure Asset Fund for Users) fund, acquiring 1,350 BTC at an approximate price of $77,873 each. This transaction comes as Bitcoin trades at nine-month lows, and Binance aims to complete its full $1 billion SAFU conversion within 30 days, following an announcement made on January 30. The decision responds to community concerns following a significant liquidation event worth $19 billion in October.

Over the weekend, Bitcoin has seen a drop below $80,000, which triggered approximately $2.5 billion in liquidations. The average purchase price for the U.S. spot Bitcoin ETF investors is around $87,830, leaving many at a loss as Bitcoin trades near $75,000. On-chain data verified that the purchase involved transferring funds from 22 Binance wallet addresses to a SAFU address, resulting in minimal transaction fees of 5.017 satoshis per virtual byte.

Industry Leaders Disagree on Crash Causes

The founder of OKX, Star Xu, has reignited a debate over the reasons behind the significant market crash on October 10. Xu accused certain companies of “irresponsible marketing campaigns,” specifically targeting Binance's offering of a 12% APY on USDe, a synthetic dollar that took on collateral value similar to USDT and USDC.

According to Xu, “Many industry participants believe the damage was more severe than the FTX collapse.” He noted that users converting stablecoins into USDe had created artificially inflated APYs of up to “70%+, perceived as low risk due to the major platform backing.”

Contrasting Xu’s claims, Dragonfly Capital partner Haseeb Qureshi provided order book analysis, stating, “This story is candidly ridiculous.” He pointed out that “BTC bottomed a full 30 minutes before USDe price was affected on Binance.” He further emphasized that the price of USDe diverged solely on Binance and not on other exchanges, although the liquidation spiral affected the market broadly.

Xu maintained that the initial market shock could have stabilized if not for the USDe leverage loop, asserting that “cascading liquidations were not inevitable—they were amplified by structural leverage.” Additionally, DWF Labs head Andrei Grachev defended Binance's involvement, indicating that the exchange's size correlates to significant market events, whether positive or negative.

Bitcoin Tests Major Support Amid Bearish Trends

The price of Bitcoin fell below $80,000, especially after the announcement that Kevin Warsh will assume the Federal Reserve chair. Reports from QCP Asia indicated that Bitcoin briefly dipped to around $74,500 after breaching crucial technical support, while ether also fell below $2,170.

Alex Thorn from Galaxy confirmed that U.S.-listed Bitcoin ETFs hold approximately 1.28 million BTC, purchased at an average price of $87,830. This means that typical Bitcoin ETF investments are currently underwater after the products experienced $2.8 billion in net redemptions in recent weeks.

Due to the increasing bearish sentiment, Polymarket participants now project a 71% chance that Bitcoin will fall below $65,000 by 2026, in line with analysts warning about critical support levels. CryptoQuant’s Julio Moreno noted potential lows between $56,000 and $60,000 based on Bitcoin's realized price analysis. He remarked, “People continue to think this is a ‘bull market’ correction. It’s not.”

Strategy's Bitcoin holdings of 712,647 BTC have unrealized losses exceeding $900 million following a decline below their $76,037 average cost basis. Despite this, notable figures are still buying; for instance, Mike Saylor acquired an additional 855 BTC for around $75.3 million, with an average price near $87,974 per coin.

Currently, data from CryptoQuant indicates increased volatility on Binance, with the volatility index climbing to approximately +3.72, a level that often precedes significant price shifts, whether upwards or downwards due to broad market liquidation.