The growth of Bitcoin and crypto exchanges over the years reflects the evolution of the industry. Exchanges are the most critical companies supporting the blockchain and crypto protocols. Moreover, the exchanges, led by the top figures in the industry, are home to most of the iconic brands in the crypto ecosystem.
Since the early days of Bitcoin until now, crypto exchanges have evolved and grown in many ways, gaining the trust of users. However, things have turned sour in an instant and users have lost trust in crypto exchanges. The collapse of the FTX has spread its contagion across the crypto space, dragging most of the crypto exchanges down.
Bitcoin records the highest outflow from exchanges since 2018
This week recorded a massive outflow of Bitcoin from crypto exchanges following the collapse of FTX. Recent data from Glassnode shows that Bitcoin is rapidly flowing out of exchanges. According to the report, users and investors have withdrawn all Bitcoins that have entered the exchange since 2018.
Since the insolvency of FTX, mainly due to asset mismanagement, the 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 wasn’t the only asset to record massive withdrawals. Stablecoins such as BUSD and USDC also recorded massive outflows from exchanges over the past seven days. On-chain data shows that a large number of outgoing stablecoins have moved to self-custody wallets. Sanitation data confirmed this message.
According to Santiment, there was a steady 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 stablecoin market cap rose to $134.07 billion, with coin inflows at the same time as BTC peaked. However, something has changed since the Fed’s rate hike in June.
Moreover, the stablecoins market registered a massive reshuffling of positions after Binance announced its plans to convert USDC to BUSD.
Self-preservation is the way to go: Santiment report
Santiment emphasized that the recent crisis is teaching everyone to embrace self-preservation. The market has learned, which is reflected in increased USDC and BUSD outflows from exchanges.
Several crypto companies and investors are facing the heat of the FTX fall. For example, Multicoin Capital, a Crypto venture capital firm, lost nearly $1 billion in assets on FTX. The magnitude of the damage in the crypto space and the massive outflow of assets and declines in value has raised questions on everyone’s mind. Many wonder if crypto is alive or dead.
There may still be hope, as the crypto space has survived similar blows. The collapse of Mt.Gox is an event that has left a cascading effect on the crypto industry. Terra’s collapse also had a similar impact on crypto.
Featured image from Pixabay, chart from TradingView.com