Following the recent collapse of the world’s third-largest crypto exchange, many users have been moving their bitcoin (BTC) from crypto exchanges to self-custodial wallets, on-chain analytics platform Glassnode revealed via a tweet from 14 November 2022. BTC investors are withdrawing coins, in favor of self-custody, at a historic rate of 106,000 BTC per month.
Such a massive outflow, the tweet added, was seen only on two previous occasions: in April 2020 and November 2020.
Additionally, the tweet revealed, whale wallets are not the only ones responsible for the shift. Small investors have also hastened crypto asset transfers after 6 November.
The balance change has been dramatic across all cohorts since 6-November.
🦐 [< 1 $BTC] = +33.7k BTC
🦀 [1-10 $BTC] = +48.7k BTC
🦈 [10-1k $BTC] = +78.0k BTC
🐋 [>1k $BTC] = +3.6k BTCAdv Dashboard: https://t.co/fHx3aHCNdy
Pro Dashboard: https://t.co/92aYVYU4Yt pic.twitter.com/dGGk3mJUZP— glassnode (@glassnode) November 13, 2022
After the revelation this month that FTX had allocated user funds to financially support operations of its sister concern Alameda Research, investor confidence hit a new low. The change in preferences suggests that users may be looking for safer options to park their crypto assets in the light of recent events.
Under normal circumstances, the exchange outflow to self-custodial wallets would be considered a positive development, as BTC is being held for a longer term. But, unfortunately, the current BTC exodus is more a sign of widespread panic and waning public confidence in centralized crypto exchanges.
For a long time now, crypto educators have been trying to raise awareness about the importance of self-custody and the dangers of exchange wallets. They have even popularized the phrase “not your keys, not your coins.” The key here refers to the private keys of a wallet. With the recent crypto exchange crises, users seem to be finally paying heed, albeit with more fear than desired.
Glassnode also reported that 10 November 2022 saw more than $1 billion worth of stablecoins flooding centralized crypto exchanges. Stablecoins have been flowing out of Ethereum smart contracts at the highest rate since the LUNA collapse. This has caused stablecoin reserves on exchanges to collectively reach an all-time high level of $41.2 billion. This sell-off has resulted in high demand for USD liquidity.
This week also saw one of the most dramatic one-day inflows of stablecoins across all exchanges on 10-Nov.
Over $1.04B worth of stablecoins flowed into exchanges following the collapse of FTX.
Live Chart: https://t.co/Hs7tw62foy pic.twitter.com/ludTuLLNjl
— glassnode (@glassnode) November 13, 2022
Further, Glassnode reveals, miners are under severe pressure as they face elevated cost pressure amidst a fall in BTC price. Last week, miners sold 7,761 BTC, or 9.5% of their held balance.
“The echos of the FTX collapse will likely act to reshape the industry across many sectors, and shift the dominance, and preference for trustless vs centrally issued assets.” Glassnode concluded.
