FTX collapse drives record drawdown in exchange Bitcoin balances

Against the backdrop of the collapse of FTX, a record outflow of bitcoins from exchange balances to cold wallets was observed. The monthly pace reached 106,000 BTC, according to Glassnode analysts. 

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 2022https://t.co/92aYVYU4Yt pic.twitter.com/em7CsDBWUf

— glassnode (@glassnode) November 13, 2022

According to their assessment, such high paces were previously characteristic of April and November 2020, as well as June–July 2022.

On November 9, the number of wallets that supported this trend reached ~90,000.

The outflow of bitcoins from exchanges to non-custodial wallets signals investors’ confidence in the long-term prospects of digital gold. The current withdrawal is driven by a loss of trust in storing coins on centralized exchanges.

The collapse of FTX has led to very pronounced changes in the behaviour of Bitcoin holders across all cohorts, the analysts wrote.

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 BTC

Adv Dashboard: https://t.co/fHx3aHCNdy
Pro Dashboard: https://t.co/92aYVYU4Yt pic.twitter.com/dGGk3mJUZP

— glassnode (@glassnode) November 13, 2022

According to Glassnode, shrimp addresses (<1 BTC) saw inflows of 33,700 BTC, while whales (over 1,000 BTC) added 3,600 BTC.

Analysts also noted a record inflow of stablecoins (about $1.04 billion in equivalent) onto exchanges. The total stablecoin balance across platforms rose to $41.2 billion. The driver was BUSD ($21.4 billion).

With stable coins flowing into exchanges on net, the total stablecoin reserve across all exchanges we track has pushed to a new ATH of $41.186B.

Of note is the growing dominance of $BUSD, as market participants move funds towards #Binance.

Live Chart: https://t.co/eBI9FyhiH2 pic.twitter.com/bafJSEBhKB

— glassnode (@glassnode) November 13, 2022

The source of the inflows were stablecoins unlocked in DeFi protocols within the Ethereum ecosystem. Monthly outflows reached $4.63B in equivalent — the highest since the collapse of Terra and UST.

As a potential signal of market demand for USD liquidity, stablecoins are flowing out of #Ethereum smart contracts at the highest rate since the LUNA collapse.

Stablecoins in smart contracts are depleting at a rate of $4.63B/mth.

Live Chart: https://t.co/g4PZhMIXQb pic.twitter.com/mdpVZKcv7F

— glassnode (@glassnode) November 13, 2022

«Стейблкоины обеспечили резерв для покупки биткоина и Ethereum c последующим выводом последних [на некастодиальные кошельки]», — подытожили специалисты.

On net, there appears to be a transition in investor holdings.

— Stablecoins are flowing into exchanges
— Trustless assets like $BTC and $ETH are flowing out

This leads to a net increase in stablecoin ‘buying power’ on exchanges of ~$4B/mth.

Live Chart: https://t.co/Df7lTFUabx pic.twitter.com/TqYTjFZY5R

— glassnode (@glassnode) November 13, 2022

As reported earlier, former MicroStrategy chief Michael Saylor and Binance CEO Changpeng Zhao called for self-custody of crypto assets.

The latest compared the current situation in the industry to the 2008 financial crisis. According to Zhao, even more companies could fail in the coming weeks.

Earlier, cryptocurrency exchanges, including Binance, began to disclose information about reserves in digital assets.

Read ForkLog’s bitcoin news on our Telegram — news on cryptocurrencies, rates and analytics.