Traders may be skeptical about the continued health of Huobi, on-chain data indicates.
The exchange, which saw turbulent trading in its HT token during Asian daytime hours after it confirmed a 20% headcount reduction, has experienced outflows of $64 million in the past 24 hours. That brings its weekly outflow count to over $100 million, according to Nansen data, and compares with $22 million in outflows at rival exchange Kraken.
Nansen notes that the highest outflows came from stablecoins USDT and USDC and from ether (ETH) wallets that had high balances.
Meanwhile, crypto entrepreneur Justin Sun, the founder of the Tron blockchain who sits on Huobi's advisory board, sent $100 million to the exchange. On-chain research house Look On Chain said wallets historically tagged to Sun withdrew $100 million in USDC and USDT from Binance, and Etherscan data shows the funds being transferred into Huobi.
Huobi’s key to success is to "Ignore FUD and Keep Building," Sun tweeted, using the acronym for fear, uncertainty and doubt.
“Huobi seems to be very vulnerable at the moment,” said Ki Young Ju, CEO of analytics firm CryptoQuant.
Ju noted that Huobi’s bitcoin (BTC) reserves are down 90% in the past year while Binance’s have more than doubled during that period. Huobi’s active user addresses have dropped significantly, too, according to CryptoQuant.
"Huobi’s user activeness dropped 44x lower from the peak in May 2019, and 20x lower than Binance as of 3rd Jan., 2023," CryptoQuant said in a report shared with CoinDesk.
Of particular concern during this stress test is the health of Huobi's HT token.
Last month, CryptoQuant said, of all the exchanges, Huobi has the "dirtiest" reserves, because it relies on its exchange token. OKX and Deribit have the cleanest, it said.
Nansen notes that Huobi holds 81% of the circulating supply, or 131.6 million out of 162.2 million, of the HT token.
According to CoinGecko data the token had a 24-hour trading volume of only $21 million, compared with its market cap of $770 million.
Its +2% bid depth also remains comparatively narrow, according to CoinGecko data, when compared with other tokens that have similar market caps. In a quarterly market report, Clara Medalie, director of research at data provider Kaiko, said that the lack of 2% bid depth was a major red flag for FTX’s FTT token.
UPDATE (Jan. 6, 12:09 UTC): Adds Justin Sun deposit in fourth paragraph.
UPDATE (Jan. 6, 14:33 UTC): Adds dollar figure to headline.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.