Binance’s Emergency Reserve Fund has made a paper profit of $217 million, nearly three months after exchanging $1 billion in stablecoins for Bitcoin, as the crypto asset surpassed $81,000 on Tuesday.
The fund, known as Secure Asset Fund for Users (SAFU), built a 15,000 BTC position with an average cost basis of $67,000 through four separate purchases executed over 13 days earlier this year.
That stash is now worth more than $1.2 billion. Binance said it may rebalance the fund if its value falls below $800 million.
Bitcoin has been volatile this year, and although it has recently recovered, it is still down about 7% since the beginning of the year and about 35% from its all-time high of $126,000 in October last year.
Origin of the fund
Binance established SAFU in July 2018 after a series of initial exchange hacks. The structure was simple: the exchange funneled 10% of all trading fees into a dedicated reserve fund. For many years, its reserves were primarily stored in stablecoins such as USDC. By the end of 2021, the total value of the fund exceeded $1 billion.
Converting your entire reserve to Bitcoin reflects a change in strategy as well as belief. Although stablecoins are built for price stability, Bitcoin is still bound to volatility, often swinging by double digits in a single week. Binance is effectively betting that Bitcoin will have higher long-term value.
