Is Crypto Really Dead? Here’s what exchange outflows convey
The FTX contagion spread quickly across all crypto exchanges. Investors have been choosing to self-custody solutions. After the fall of FTX, there have been huge outflows of Bitcoins and stablecoins from exchanges.
According to Glassnode data, the speed at which Bitcoins leave exchanges has been so fast that all the BTC that had entered exchanges since 2018 was withdrawn. The demand for spot-driven and self-custody Bitcoin markets is growing fast. This behavior is unprecedented, despite Bitcoin having been through many bear markets in the past.
Courtesy: Glassnode/Onchain-CollegeIn addition to Bitcoin, there’s been a massive outflow of popular stablecoins like BUSD and USDC, from exchanges, over the last week. All these stablecoins are moving into self-custody rapidly. Santiment, an on-chain data provider, wrote in their most recent report:
The year began with a positive start. We saw a steady inflow of major stables (USDC and BUSD) into the cryptomarket. This suggests that new money may be coming to buy the dip (as the price was falling). The marketcap of major stables reached $134.07 Bn at the same time that the BTC/ETH reached their highest point this year. It has been a gradual decline since then, accelerated by FED’s June announcement of a 75 bps increase.
Courtesy of Santiment. Since Binance announced that USDC stablecoins would be converted to BUSD, there has been a huge reshuffle in stablecoin holdings. “If there is one lesson we have learned from recent events, it’s that self-custody. Market learns quickly, as we witnessed huge spikes of Supply outside of Exchanges for USDC or BUSD recently,” says Santiment.
Courtesy of SantimentIs crypto really dead?
The FTX contagion spread quickly and many players in the crypto space were severely affected. Multcoin Capital, a crypto venture fund, suffered losses of over a billion dollars due to its holdings on FTX.
Many are questioning whether crypto is really dead after the collapse of the crypto market. However, instances such as FTX have occurred in the past with exchanges such as Mt. Gox collapsing overnight.
People are choosing self-custody over selling their coins to show that they still believe in good crypto projects and blockchain. Although there have been some short-term headwinds, such as institutional players selling their BTC after the FTX collapse, it is too early to know if crypto is dead. It is still a significant market at $800 billion.
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