jakiro
Author: Biupa-TZC,Twitter丨@biupa
As the market gradually cools down, Binance today announced that MGX has invested in Binance.Based on the objective fact that Binance sold a large number of crypto assets in January, I analyzed the possible investment logic of MGX, the motivation for Binance to reduce its holdings, and the market impact, hoping to provide a logical explanation for a series of events.
one,Valuation of Minority Equity Investments
While working in a foreign investment banking, I participated in a minority equity investment transaction, MinorityStakelnvestmentDeal.In the transaction at that time, the buyer was a European pension asset management institution, the seller was a Chinese company, and our bank served as the buyer’s consultant (Buyside Advisory).
In such investment transactions, the buyer needs to determine the valuation of the target company, so a complex valuation model is usually constructed.
We used an Excel model with dozens of worksheets (Tabs) to perform valuation calculations to ensure that the transaction price is reasonable.
Since the buyer wants to buy at a low price and the seller wants to sell at a high price, the two sides usually need to conduct multiple rounds of negotiations to reach an agreed transaction price.
From the perspective of investment logic, the process of MGX investing in Binance Minority Equity is likely to be similar.In transactions, MGX needs to model Binance’s valuation and negotiate with Binance on valuation and investment conditions.
Trading consideration/valuation will be the core issue of the entire transaction.If the buyer can lower the price, it can increase the return on investment (IRR/MOIC); if the seller can raise the price, it can increase its own profits.The conflict of interest between the two is also the origin of the Binance sale in January.
two,MGX’s background and investment methods
MGX is an investment platform jointly established by Abu Dhabi sovereign wealth fund Mubadala and technology group G42, and has the attributes of a semi-sovereign fund.Mubadala is known for its high salary. Most of its staff come from foreign investment banks in Europe/Hong Kong/USA, and some have also switched jobs from private equity funds (Mega Fund). Therefore, the team is extremely professional.
According to the conventional process of private equity investment (PE), MGX will also conduct detailed valuations before investing in Binance.
The final transaction consideration was not disclosed to the public, and only professional institutions such as investment banks, lawyers, auditors and other professional institutions related to the transaction can see the specific data.Commonly used calculation methods may include P/E, EV/EBITDA, EV/AUM, etc.Here we can refer to how American sell-side analysts value Coinbase, which has a similar logic.
3. Binance’s asset composition and number of shares reduced
In the valuation of traditional enterprises, assets mainly refer to fixed assets and will be evaluated by professional institutions (such as JLL, Cushman & Wakefield).As the world’s largest crypto trading platform, Binance’s asset side not only includes fixed assets, but also a large number of cryptocurrency holdings.
According to Binance’s public Proofof Reserves, its own assets can be calculated by minusing the “net customer balance” from “Ran Wallet Balance”.In 2025
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January 1:Binance holds approximately 50,000 BTC, 3 billion USDT, 220,000 ETH, 6 million BNB, 450,000 SOL, 70 million FDUSD, 100 million XRP, 700 million USDC, etc.
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February 1:Binance holds approximately 2700 BTC, 270 million USDT, 150 ETH, 5 million BNB, 4000 SOL, 30 million FDUSD, 90 million XRP, 1.3 billion USDC, etc.
Judging from the data, Binance significantly reduced its holdings in January
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50,000 BTC (about 5 billion US dollars)
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220,000 ETH (about 700 million US dollars)
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1 million BNB (about $600 million
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450,000 SOL (about 100 million US dollars)
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USDT decreased by 2.7 billion, USDC increased by 1.3 billion, total net reduction of stablecoin holdings by 1.4 billion US dollars
A total of about US$8 billion of crypto assets were reduced.
4. Possible reasons for Binance’s massive share reduction
Binance reduced its holdings of about $8 billion in crypto assets in January, accounting for the majority of its holdings.I think there are three possible reasons
1. Easy to confirm valuation and reduce the impact of price fluctuations
The price of cryptocurrencies fluctuates greatly, with a single-day volatility reaching 5%-10%, and the liquidity discount problem is obvious.Cleaning up crypto assets before transactions helps reduce valuation uncertainty and makes it easier for both parties to reach consensus.
2. Match MGX’s investment preferences
As a semi-sovereign fund, MGX’s investments may not only pursue financial returns, but are related to the Abu Dhabi government’s investment promotion/national strategy.Therefore, MGX is more likely to focus on Binance’s core trading business and is not very interested in buying the crypto assets it holds.Binance may proactively divest crypto assets before trading to match MGX’s investment preferences.
3. Old shareholders pay dividends
Binance may use part of the cashed funds to dividends from old shareholders by reducing its holdings of crypto assets, so that old shareholders can obtain cash before trading.MGX can invest in Binance’s core business at a lower price, achieving a win-win situation.
V. Market impact analysis
Binance’s share reduction behavior has had a certain impact on the crypto market in January
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BTC:The total net inflow of ETFs in January was US$5.25 billion, and Binance’s BTC reduced holdings was worth US$5 billion, and the two basically offset
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ETH:The total net outflow of ETFs in January was US$660 million, and Binance reduced its holdings by US$700 million, which basically doubled the outflow of ETFs.
If Binance does not make this round of share reduction, BTC and ETH may close more than 102,500 and 3,300 in January.BTC may also hit ATH prices above 109,000 in January
However, as most altcoins (including ETH) have fallen in mid-to-late December, even without the selling pressure of Er’an, it is still unknown whether the market can reach a new high overall in January.
My estimate is that without Binance’s selling pressure, ETH tends to close overall green in January (above 3300), but the closing price may be lower than the December opening price of 3700.The mountain race may also be a slight increase overall compared with December 31, but it is still lower than the high on December 7.
The decline in February was mainly due to the uncertainty of tariffs/recession caused by the Trump administration, which has little to do with Binance’s selling pressure
6. Future prospects
After investing in MGX, I think it is neutral or good for the currency market as a whole.
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MGX uses stablecoins to invest in Binance, which means that Binance has added new stablecoins on its asset side. These stablecoins may be used to make market lending/rebuy cryptocurrencies, thereby improving the liquidity of the currency circle.
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If MGX requires Binance to no longer hold cryptocurrencies and operate only as a pure exchange, because there is almost no cryptocurrency in An’s existing assets, this will not have any negative impact on the future market.
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If Binance sells out just for the convenience of valuation + shareholder dividend demand, there is still a plan to enter cryptocurrency in the future. As the market gradually declines/bottoms in March, it may be bought back as a potential bottom-buying force, which has a potential benefit for the bottom-up rebound in the future.
As a private enterprise, An really has no obligation to tell us about the currency selling operation in January in advance.This is not just an example of information asymmetry that retail investors are exposed to in this market.
