Users have fled exchanges in the last week, fearing security and regulatory scrutiny. According to data from the on-chain monitoring resource Coinglass, US exchanges have seen significant BTC balance reductions.
Following the FTX scandal, efforts to raise awareness of the risks associated with custodial BTC storage increased on social media.
Users appeared to heed the warning, withdrawing over $3 billion in cryptocurrency in the week following the solvency fiasco and ordering an unprecedented number of hardware wallets.
Meanwhile, the fallout from FTX is just getting started, and as regulators plan more investigation and focus on crypto in general, investor anxiety grows.
The data shows that the trend is still in place regarding exchange withdrawals. Net withdrawals have outpaced deposits on nearly all major platforms in the last seven days.
Gemini has the biggest weekly drop, down nearly 30,000 BTC, followed by Kraken, Binance, and Coinbase.
Unsurprisingly, withdrawals have been hefty on U.S. exchanges, with the jurisdiction set to play an essential role in the FTX saga in the future.
This week, lawmakers announced a special hearing into what happened at the exchange, with its ex-CEO, Sam Bankman-Fried, reportedly due to be extradited from the Bahamas to the United States.
“The fall of FTX has posed tremendous harm to over one million users, many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear within a matter of seconds,” Maxine Waters, Chair of the U.S. House Financial Services Committee, which will host the hearing, said, quoted by mainstream media.
Meanwhile, Coinglass data show that even exchanges with no exposure to FTX have failed to stem the exodus.
In total, 134,000 BTC has left their books this week, equivalent to approximately $2.2 billion at current prices, with approximately $1.5 billion coming from U.S. platforms.
While exchange withdrawals have increased, according to reports, the average Bitcoin holder remains significantly underwater — thus less inclined to sell.
Glassnode, an on-chain analytics firm, confirms this. The average long-term holder (LTH), an entity that has held coins for at least 155 days, is 33% in the red.
This is almost unprecedented and is only matched by the depths of the 2018 bear market when the average tally reached 36%.
LTHs were described as being in “acute financial distress” in the accompanying comments.
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