As per CryptoQuant, a research company, Binance, the primary crypto exchange, moved approximately $4.4 billion worth of Bitcoin between its digital wallets on Sunday. The transfer was split into two batches, one consisting of 117,000 tokens and the other consisting of 40,000 tokens, as tweeted by Julio Moreno, Head of Research at CryptoQuant. Binance confirmed in a recent tweet that the Bitcoin transfer between its cold and hot wallets was required due to some adjustments in its bitcoin addresses.
The Need for the Transfer
Cold wallets offer a higher level of security for the digital currency compared to hot wallets because they are not connected to the internet. Binance, when asked for a comment over the transfer, referred to one particular blog post they published at the beginning of this year.
In the post, they explained that large crypto exchanges use a combination of cold and hot wallets to ensure optimal liquidity and security. However, due to the crypto crash last year and bankruptcies like FTX, confidence in digital-asset platforms has decreased. This has led to a lingering skepticism towards the industry and has made crypto traders more cautious about major changes related to assets held on exchanges.
Paused Bitcoin Withdrawals
Bitcoin withdrawals on Binance were also temporarily suspended for about 90 minutes on Sunday due to blockchain congestion. The company cited a similar cause for another pause on Monday in Asia.
To address the problem, Binance introduced increased fees to speed up pending transactions for Bitcoin miners who maintain the blockchain. The new fees were successful in resolving the issue, and the suspension was lifted.
Bitcoin and other cryptocurrencies faced a setback on Monday, resulting in a decline of up to 3.1% before a slight recovery. At the time of this writing, Bitcoin is currently trading at a value of $27,929.