People who hold Bitcoin have been moving their funds from centralized exchanges to their own self-custody wallets en masse following the collapse of FTX, according to data from Glassnode. The insights company said that coins were being moved to personal wallets at an historic rate of 106,000 BTC per month.
Bitcoin was spawned out of the financial crisis of 2008 as a reaction to the financial system. Since then, outflows of Bitcoin from exchanges on this scale have only been seen three times until now. There was April 2020, November 2020, and June-July 2022. With the economy doing badly, it’s exposing weak crypto companies like FTX and as a result of FTX’s collapse, investor confidence in exchanges and that they’ll keep funds safe has been knocked.
With a personal, self-custody wallet, you are given a seed phrase or a private key that you must look after. If these are lost, the wallet becomes inaccessible, but the benefit is that nobody can spend your assets or freeze you out of them – you have full control.
Another interesting detail that was pointed out by Glassnode was that stablecoins have been flowing into exchanges dramatically. Over $1.04 billion of stablecoins went into exchanges following FTX’s collapse. It suggests that investors are letting go over stablecoins in exchange for Bitcoin and Ethereum, the two largest cryptos that should survive the bear market where smaller altcoins could fail.
Most crypto investors are now watching to see what happens with the price of Bitcoin going forward. As mentioned earlier, Bitcoin was created from the 2008 financial crisis, so it hasn’t yet experienced a global recession. How low the price of this asset could go is anyone’s guess, but holders will be hoping by now that it has reached, or is nearing, a low. As always with anything crypto, if you are tempted by the current prices to enter the market, only invest what you don’t mind losing.
Source: Glassnode (Twitter) via Cointelegraph