Two of the world’s biggest crypto exchanges, Binance and Bybit, temporarily froze withdrawals during a sharp market downturn, triggering renewed fears across the crypto community.
Key Takeaways
- Binance and Bybit both paused withdrawals during a sudden crypto selloff that saw Bitcoin fall over 13 percent, dipping below $64,000.
- Binance restored services within 20 minutes, citing technical strain, not liquidity problems.
- Despite online panic, on-chain data showed increased deposits, not mass withdrawals.
- Exchange leaders, including Changpeng Zhao and He Yi, addressed rumors and urged calm.
What Happened?
As the crypto market plunged, Binance and Bybit temporarily suspended withdrawals, citing technical issues. Bitcoin fell over 13 percent in a single day, crashing below $64,000 for the first time since October 2024. While social media buzz raised alarms about exchange solvency, Binance quickly restored operations, and data later revealed that deposits actually outweighed withdrawals.
Binance co-founder He Yi posted on X that some users in the community had launched a “withdrawal campaign.” However, after the campaign began, the amount of assets in Binance’s addresses actually increased. She noted that regularly initiating withdrawals across all trading…
— Wu Blockchain (@WuBlockchain) February 5, 2026
Withdrawal Freezes Amid Bitcoin Crash
The turmoil began when both Binance and Bybit halted withdrawals during a fast-moving crypto selloff. Bitcoin’s sharp decline triggered a surge in trading activity, leading to system stress across platforms.
Binance posted on X, stating, “We are aware of some technical difficulties affecting withdrawals on the platform. Our team is already working on a fix, and services will resume as soon as possible.”
- Binance’s withdrawal suspension lasted approximately 20 minutes.
- The platform attributed the issue to technical strain, not a liquidity shortfall.
- Bybit also halted withdrawals, though it gave fewer specifics on the cause.
Despite market volatility, Binance emphasized that it retains strong liquidity and urged users not to panic. The exchange suggested using self-custody options such as Trust Wallet or hardware wallets during turbulent periods.
Panic on Social Media
Posts on X during the crash encouraged users to withdraw funds from exchanges, stoking fears of an FTX-style collapse. However, the actual blockchain data painted a different picture.
- On-chain analytics showed Binance balances increased.
- Deposits exceeded withdrawals, contradicting mass panic narratives.
- He Yi, Binance’s co-founder, confirmed that asset levels rose during the stress.
Yi described the online withdrawal movement as a coordinated campaign and said it inadvertently served as a real-time stress test. She cautioned against rushing transfers in volatile conditions, warning that user mistakes during blockchain transactions can be costly.
Exchange Leaders Push Back on Rumors
Amid rising speculation, Changpeng Zhao (CZ) dismissed claims that Binance had dumped Bitcoin to accelerate the selloff.
- Zhao called the rumors “imaginative FUD” and clarified that the funds in question belonged to users.
- He stressed that Binance does not trade user assets.
- Binance currently holds over $155 billion in reserves, according to CoinMarketCap (as of January 2026).
Yi echoed those remarks and reinforced Binance’s long-term commitment to transparency and liquidity. She also encouraged regular self-custody practices among users as a safety habit.
Broader Context: Crypto’s Rough Stretch
Bitcoin’s drop to under $64,000 marked its lowest level since October 2024, wiping out nearly 50 percent of its value from last year’s peak. The selloff reversed most of the gains made during President Trump’s second term, which had previously sparked optimism due to perceived crypto-friendly policies.
While this week’s downturn was not as severe as the $19 billion wipeout seen during the China tariff crisis, it served as a reminder of how quickly sentiment can shift in crypto markets, especially during leveraged downturns.
CoinLaw’s Takeaway
In my experience, events like this reveal just how fragile trust can be in crypto. When people see prices tanking, the first instinct is to get out. But what stood out to me was that while X was full of panic, the blockchain told a more grounded story. More people were putting money into Binance than pulling it out. That says a lot about the underlying strength of the exchange.
I found it reassuring to see Binance respond quickly, with full transparency, and to see leaders like He Yi and CZ address things head-on. It reminds users that even in chaos, facts and data matter more than fear-driven posts. If you’re in crypto for the long haul, moments like these are why self-custody and staying calm can make all the difference.
