BlockTower Capital Deposits $16.78M in DeFi Tokens to Binance, Likely Takes $2.94M Loss

A major crypto investment firm, BlockTower Capital, has made a major move by transferring to Binance over the past nine hours assets valued at $16.78 million.

The funds consist of DeFi tokens that amount to $16.78 million and have been moved from an unknown wallet to the exchange.

It’s a significant sum, and the fact that it’s all headed to Binance is especially eye-opening. Large-scale asset movements are always closely watched when it comes to institutional players like BlockTower. And when those movements are in the direction of an exchange, it understandably raises questions about why those assets are being moved in the first place. Are the assets being exchanged for something else? Are they at risk of being liquidated? Or is it just a simple matter of reallocation within the BlockTower portfolio?

Breakdown of Deposited Tokens

The most recent deposits that BlockTower Capital made involved four distinct DeFi tokens, yielding varied financial results. Let’s take a closer look at the particulars of each asset transfer:

– Uniswap (UNI): The company placed 532,754 UNI in an account, worth $5.33 million. In this instance, BlockTower did not suffer a loss like in some of its other trades. Instead, it earned a quite respectable gain of $579,000, which was reflected in the amount gained on the sale process rather than in an increased price reflected in the token amount held in the account.

– Chainlink (LINK): The transfer encompassed 197,451 LINK, translating to $4.29 million. However, this investment brought about a loss of $426,500, signifying a 9% drop in value.

– Maker (MKR): The firm moved 3,862 MKR, worth $3.77 million. This was the biggest loss among the deposits, with BlockTower probably now looking at a $1.7 million deficit—31% less than its initial investment.

– Ethena (ENA): The last token in the deposit batch was 5.153 million ENA, valued at $3.39 million. This trade went south too, with BlockTower realizing an estimated $1.39 million loss, representing a 29% decline.

While sending tokens to Binance certainly doesn’t mean the sender is about to sell, it is often a prelude to doing just that—especially when the amount sent is as large as what CoinMetrics observed on the 8th. Sending tokens to a centralized exchange is usually a good indicator that the sender may have liquidation on the mind.

BlockTower Capital’s Remaining Holdings

Regardless of the recent asset movements, BlockTower Capital maintains a big crypto portfolio. On-chain data shows that it now holds a little more than $21.7 million across various digital assets. Its most significant and interesting holdings are 20,314 AAVE, worth $5.47 million,…., and 1,713 ETH, valued at $4.84 million. These positions certainly hint at a “still engaged” status for BlockTower in terms of DeFi, if not more traditional digital asset investment.

Repositioning or Risk Mitigation?

BlockTower’s latest move is uncertain. Institutional investors often make adjustments to their holdings that are understandable when viewed through the lenses of market trends, liquidity needs, and risk assessments. Given the significant losses that BlockTower has taken on MKR and ENA, this move could very well be a risk management strategy aimed at cutting losses and reallocating capital. But given that BlockTower’s profitable trade on UNI came during a period when the asset was already sharply up from where it had been in early summer, this might also be a move to capitalize on favorable market conditions while exiting underperforming assets. Whether this was a one-time adjustment or part of a more comprehensive pivot toward a different investment strategy will likely become clearer in the coming days.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!

Image Source: angrysun/123RF // Image Effects by Colorcinch