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Bitcoin holders are skittish following the dramatic collapse of the FTX cryptocurrency exchange, according to blockchain analysts at Glassnode. Bitcoin (BTC) withdrawals have hit a record rate of 106,000 monthly, indicating that customers may be losing trust in third-party services.
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Glassnode tweeted that there had been three other periods in recent years with similar withdrawal patterns, April and November 2020 and June to July 2022, when combined factors — including the Russian invasion of Ukraine and the failure of the Terra LUNA stablecoin — caused the crypto market to nose-dive.
Following the collapse of FTX, #Bitcoin investors have been withdrawing coins to self-custody at a historic rate of 106k $BTC/month.
This compares with only three other times:
– Apr 2020
– Nov 2020
– June-July 2022 https://t.co/92aYVYU4Yt pic.twitter.com/em7CsDBWUf
— glassnode (@glassnode) November 13, 2022
In the past, similar outflows have sometimes signaled a bull run. In this case, it’s much more likely to be a sign that investors have lost faith in big-name exchanges. As Markets Insider noted, these actions “suggest crypto investors are reconsidering how to manage their digital assets now that the once third-largest crypto exchange in the world has faltered and the value of the fortune built up by FTX’s founder Sam Bankman-Fried [has] now been wiped to $1.”
CoinEdition quoted Hong Kong Digital Asset Operations Manager Alan Wong, who said that after FTX, “things will continue to simmer” and that with an $8 billion gap “between liabilities and assets, when FTX is insolvent, it will trigger a domino effect, which will lead to a series of investors related to FTX going bankrupt or being forced to sell assets.”
Reuters reported Monday that FTX is under investigation by an alphabet soup of agencies, including the U.S. Justice Department and the Securities and Exchange Commission. As of 11:30 Monday night, Bitcoin was trading at $16,770 after dipping below the $16,000 mark earlier in the day.