Crypto exchanges record massive outflow of Bitcoin, what does this indicate?
The growth of Bitcoin and crypto exchanges over the years reflects the evolution of the industry. Exchanges have been the most critical businesses supporting the blockchain and crypto protocols. In addition, the exchanges, led by the top figures in the industry, house most of the iconic brands in the crypto ecosystem.
Since the early days of Bitcoin until now, crypto exchanges have developed and grown in many ways, gaining the trust of users. However, things have turned sour in an instant and users have lost faith in crypto exchanges. The FTX collapse has spread its contagion across the crypto space, pulling down most crypto exchanges.
Bitcoin has the highest exchange rate since 2018
This week saw a massive outflow of Bitcoin from crypto exchanges following the collapse of FTX. Recent data from Glassnode reveals that Bitcoin is rapidly flowing out of exchanges. According to the report, users and investors have withdrawn all the Bitcoins that flowed into the exchanges since 2018.
Since the FTX bankruptcy, primarily due to mismanagement of assets, demand for self-custodial and spot-driven BTC markets has increased. This action has never been recorded in all previous bear markets that Bitcoin has survived.
Bitcoin was not the only asset to record massive withdrawals. Stablecoins such as BUSD and USDC also recorded massive outflows from exchanges in the past seven days. On-chain data shows that a large number of the outgoing stablecoins have moved into self-deposit wallets. Santiment’s data confirmed this report.
According to Santiment, there was a constant influx of stablecoins such as USDC, BUSD and USDT into the crypto market in early 2022. In addition, the data suggested that new investors bought assets as prices fell.
The market capitalization of stablecoins rose to $134.07 billion, with the influx of coins at the same time as BTC peaked. However, things have changed since the Fed’s rate hike in June.
Furthermore, the stablecoins market has seen a massive reshuffle of holdings after Binance revealed its plans to convert USDC to BUSD.
Self-storage is the way to go: Santiment report
Santiment emphasized that the recent crisis is teaching everyone to embrace self-preservation. The market has learned, reflected in increased outflow of USDC and BUSD from exchanges.
Several crypto firms and investors are facing the heat of the FTX downfall. For example, Crypto venture capital firm Multicoin Capital lost nearly $1 billion in assets held on FTX. The extent of damage in the crypto space and the massive outflow of assets and depreciation has left everyone questioning. Many people wonder if crypto is still alive or dead.
There may still be hope as the crypto space has survived similar blows. The Mt.Gox collapse is an event that left a cascading effect on the crypto industry. The Terra collapse also had a similar impact on crypto.
Featured image from Pixabay, chart from TradingView.com