Binance Adds $300M in Bitcoin to User Protection Fund

This acquisition is part of Binance’s plan to convert $1 billion of its protection fund into Bitcoin, even as prices recently slid. At the same time, Strategy, led by Michael Saylor, acquired 1,142 BTC for roughly $90 million at prices well above recent market levels, expanding its already massive holdings.

Binance Boosts SAFU Reserves

Binance added another $300 million worth of Bitcoin to its emergency reserves, as part of its ongoing experiment with a Bitcoin-backed protection fund. According to data from blockchain analytics platform Arkham, the exchange purchased 4,225 Bitcoin for its Secure Asset Fund for Users, commonly known as SAFU, which is a wallet that is designed to act as an emergency backstop for users in the event of extreme market disruptions or operational issues.

With the latest acquisition, the SAFU fund’s Bitcoin holdings rose to more than $720 million at current market prices. 

Binance confirmed the move in a post on X, stating that it is continuing to buy Bitcoin for the fund and plans to complete the conversion within 30 days of its original announcement. The strategy is a big shift in how the exchange structures its user protection reserves, transitioning away from a more diversified setup toward a heavier reliance on Bitcoin as a long-term store of value.

The move was first shared on Jan. 30, when Binance revealed plans to shift $1 billion of its protection fund into Bitcoin. The exchange framed the decision as a vote of confidence in Bitcoin’s durability and long-term role as the dominant digital asset. 

However, the strategy also introduces new risks. By concentrating the fund in Bitcoin, Binance exposes its emergency reserves to the asset’s inherent volatility. This means that sharp price swings could materially reduce the fund’s value during periods of market stress. To mitigate this risk, Binance said it would rebalance the fund back up to $1 billion if market volatility pushes its value below $800 million.

This latest purchase comes against the backdrop of a crypto market correction. Bitcoin recently slid to around $59,930, which was a level not seen since October of 2024, prior to the re-election of Donald Trump. Market sentiment is also shaky, with investors showing more sensitivity to macro uncertainty and the lack of clear bullish catalysts.

BTC’s price action over the past month (Source: CoinCodex)

Hina Sattar Joshi, director for digital assets at liquidity and data solutions firm TP ICAP, believes that many investors are still anchored to the traditional four-year Bitcoin cycle narrative, which historically features pronounced boom-and-bust phases. In this context, Binance’s continued accumulation of Bitcoin for its SAFU fund stands out as a long-term conviction play, even as near-term price action and investor confidence are under strain.

Strategy Buys More Bitcoin

Other companies are also not letting the current market volatility stop it from accumulating Bitcoin. Strategy, led by Bitcoin advocate Michael Saylor, added more Bitcoin last week, expanding its already massive holdings. According to a filing with the US Securities and Exchange Commission, the company acquired 1,142 BTC for approximately $90 million, paying an average price of $78,815 per coin.

The timing of the purchase raised eyebrows across the market. Bitcoin spent most of the week trading well below Strategy’s acquisition price and even briefly dipped to around $60,000 last Thursday. 

Despite the pullback, Strategy executed its buy close to $79,000, which did little to lower the firm’s average cost basis. After the acquisition, Strategy now holds 714,644 BTC purchased for roughly $50 billion at an average price of $76,056 per coin.

Strategy purchase price vs Bitcoin price (Source: StrategyTracker.com)

People quickly pointed out that the purchase came during a time when Bitcoin was trading below Strategy’s average entry price, making it the second such acquisition under those conditions in the current cycle. Bitcoin fell sharply below $78,000 earlier in the week and has struggled to reclaim the $72,000 level since, according to CoinCodex data. By buying above its cost basis, Strategy avoided the optics of averaging down, even as prices offered opportunities to do so.

The situation is similar to Strategy’s experience in 2022, when Bitcoin slid below $30,000 while the company’s average purchase price hovered slightly higher. At that time, Strategy slowed its accumulation but continued to make smaller buys. 

In the days leading up to the latest purchase, some traders speculated that Strategy might avoid buying below its average cost this cycle, which fueled jokes on social media suggesting Saylor might announce future purchases at even higher prices.