Binance spends $13 million from the insurance fund
- Bitcoin price saw a severe crash this weekend, dropping by around 20% within minutes.
- Binance's protective measures reacted, and its insurance fund used $13 million to protect its futures users.
- Binance now aims to increase the amount stored within the fund by an additional $30 million.
The crypto market saw a lot of volatility over this past weekend, causing yet another crypto price crash. Bitcoin, specifically, lost as much as 20% of its price, causing the leading exchange, Binance, to use its insurance fund to protect users.
Binance’s insurance fund’s role is to protect the exchange’s users from auto-deleverage liquidations on its futures platform. Over the weekend, the exchange had to use as much as $13 million due to the Bitcoin price crash. The exchange commented that it plans to add around $30 million more to ensure that the fund can protect its customers.
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Bitcoin volatility endangers futures traders
Binance futures saw a lot of popularity in a brief period after its launch. It is currently well on its way of becoming the leading platform for trading crypto derivatives.
Meanwhile, its fund is there to protect users from severe and unexpected price swings and auto-deleverage liquidations. The fund got tested over this weekend, as Bitcoin price crashed by about 20% yesterday.
The drop was rather sudden, taking place in less than 10 minutes, causing the price to drop by around $1,500. The exchange’s fund then spent $13 million to protect users. The state of the fund is evident on the official website, which tracks the amount stored within.
On May 10th, the fund held over $21 million in USDT. However, today, May 11th, that amount sank to $7.7 million.
Binance plans to add $30 more to the fund
Binance recognized this on its Twitter account, further adding that it plans to add an extra $30 million to the fund. It proved useful in protecting the users, although it clearly requires a greater amount in order to cover the customers properly.
Of course, the value and importance of funds like these are crucial in order for traders to be protected. While Bitcoin’s 20% drop did come as a surprise, this is not that unusual. Bitcoin’s volatility can eradicate an entire fortune in minutes. With that in mind, solutions like the insurance fund are necessary in order to attract institutional investors.