Panic is contagious.
Cryptocurrency markets showed that this week. As one of the world’s largest exchanges, FTX, was found to have “misappropriated” customer assets (we put together a “WTF happened” piece Here), people are pulling their Bitcoin Large scale exchanges.
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Cold storage refers to storing one’s bitcoins offline. This allows investors to take advantage of the unique “no counterparty” characteristic of bitcoin. Otherwise, customers need to rely on exchanges like FTX to store their bitcoins.
And that trust is crumbling.
The chart below shows how many people have moved their bitcoin off the exchange since the FTX explosion, as cryptocurrency news The cycle went from bad to worse.
Biggest one week fall since July 2017
Entering the morning of Monday, November 7, there were 2.419 million bitcoins on exchanges. By the end of the week, this balance had dropped by 4.7% to 2.317 million bitcoin, as per the daily totals from the chart above.
This is an outflow of over 100,000 bitcoin in less than a week – in fact, it is the biggest one-week drop since July 2017.
Even looking at bitcoin balances on exchanges over a ten-year sample, the end of the graph may note a bull run over the past few weeks. But the truth is that people have been taking bitcoin off exchanges for some time now.
I then plotted these figures against the total bitcoin supply. Only 12.08% of bitcoin is currently live on exchanges – this is the lowest figure since January 2018.
The chart below dives into the deluge of bitcoin flowing out of exchanges over the past week — compared to two other crises the market has endured this year: Luna’s death spiral on May 8 and the suspension of withdrawals on June 12. There is no better picture to depict the panic in the market then a sudden flood of bitcoin rushing for the exit doors.
secure exchange
binance Already almost all of the surrendered FTX market share has been eaten up. The Coinageco data below shows that in terms of trading volume, their dominance increased from 57% to 64%. Top 10 Crypto Exchanges Between November 11 and November 13, a staggering jump of 7% in three days.
was the second big winner okxincreased from 11.9% to 13%.
Yet in terms of storing bitcoin on exchanges, while Binance may have gained in the short term through the demise of such a large rival, the longer term trend is towards cold storage.
final thoughts
FTX was royalty. Sam was the bankman-fried golden boy who graced the cover of every magazine, spoke before Congress, and represented the industry at large.
Amazingly, it was all a facade.
People are scared. which is now reliable To securely store your bitcoins? Cold storage means you don’t get to answer that question. It leverages the power of blockchain to store it offline.
Sadly, it seems that no central institution can be trusted in space right now. This latest scam is further proof of that, and a prime advertisement for cold storage. The data is showing that people are listening.
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