Crypto Exchange Outflows Continue to Rise as Bitcoin Holders Resort to self-custody
After the fall of the world’s second-largest cryptocurrency exchange (in terms of trading volume) a week ago, Bitcoin (BTC) investors have progressively shifted their portfolio to self-custody alternatives. As per analytics firm Glassnode, on-chain exchange traffic data reveals an increase in transfers to self-custody wallets. In a tweet published on November 13, Glassnode revealed that monthly Bitcoin cryptoexchange outflows had reached near-peak volumes of 106,000 BTC.
In addition, this has only occurred three additional times: Back in April, November 2020, and June/July 2022. On November 9, it was announced that the count of Bitcoin wallets getting the asset from cryptoexchange addresses increased to approximately 90,000.
Typically, crypto exchange outflows are a positive indicator that BTC is being held for the long haul. In this instance, though, it looks to be the outcome of dwindling trust in centralized cryptocurrency exchanges. Outflows have led in “good balance adjustments throughout all wallet classes, from shrimp to whales,” according to Glassnode, who added:
“The collapse of FTX has significantly altered the mindset of Bitcoin holders throughout all ages.”
Since November 6, when the FTX debacle started, balance movements have grown throughout all BTC wallet capacities, with “shrimps” containing fewer than one coin growing by 33,700 BTC. The growth of 3,600 BTC in whale wallets containing over 1,000 coins indicates that the self-custodianship drive is occurring throughout the board.
— glassnode (@glassnode) November 13, 2022
The term “not your keys, not your money” has more gravity than it has ever been, and industry experts are beginning to push for self-custody options. Ethereum instructor Anthony Sassano said on November 13 that cryptocurrency users should not store their funds on centralized exchanges if they aren’t actively trading huge sums.
Michael Saylor of MicroStrategy said in an interview with Cointelegraph that self-custody prohibits centralized intermediaries from misusing their authority. Glassnode also observed that stablecoins, several of which destabilized in the week ahead, have been entering crypto exchanges at a faster pace during the previous week. Over $1 billion in stablecoins arrived on controlled crypto exchanges on November 10. It said that theaggregate stablecoin reserve across all crypto exchanges it monitors hit a fresh record high of $41.2 billion.
“The echoes of the FTX crash will certainly affect the market across numerous industries, shifting the supremacy and desire for trustless vs centrally released assets,” the report said.