One of the biggest exchanges on the market craves additional supply
One of the world’s largest cryptocurrency exchanges, Binance, is reportedly running out of Cardano supply as investors drive the coin away from exchanges and use it in alternative decentralized solutions and wallets.
Why does exchange increase the interest rate?
Binance’s staking feature is created to control the supply of various cryptocurrencies on the platform, as the outflow trend is still on the market since 2021. Whenever the exchange’s supply is running short, it uses various techniques for attracting more funds to their wallets.
With Binance, the platform offers a relatively high interest rate for anyone who deposits their ADA coins. Compared to stablecoin staking, which offers around 10% APY, the rate of 54% is considered significantly higher compared to the average market offer.
As more traders and investors deposit their Cardano on the platform, the interest rate will slowly get down to an average value, which causes the stabilization of the supply of ADA on the exchange.
Usually, exchanges use the supply to fund short-term orders and pay income from open positions.
Cardano loses gained confidence
March was a considerably successful month for ADA, which gained over 50% to its value since the local bottom reached on March 14. After reaching $1.2, Cardano swiftly reversed below the $1 threshold and now trades at $0.9.
After the retracement, Cardano fell below the 50-day moving average, showing a lack of buying power in the market and bearish sentiment among long-term investors. Cardano has remained in the extended downtrend for the past 230 days. During the downtrend, ADA lost 67% of its value.
