Following the collapse of the centralized FTX exchange, there is now a growing loss of confidence in centralized exchanges leading to a landmark outflow of Bitcoin into self-custody wallets as per a post.
On–chain exchange data revealed that investors are extremely finding alternatives to secure their funds as a result of the incredible collapse of the second largest crypto exchange, FTX.
The unfortunate incident has driven the use of external wallets to a level never seen before. It has been learned that withdrawals from exchanges have reached an all-time high of 106,000 BTC per month.
Glassnode added that such incidents have only happened three times: April 2020, November 2020, and June/July 2022 but none could be compared to the recent one.
Glassnode senior analyst Checkmate emphasized that three exchanges (Huobi, Gate.io, Crypto.com) were the most hit.
It should be noted that exchange outflows are often regarded as a sign that holders are ready to hold for the long-term.
Glassnode stated that the increasing exchange outflows has led to a positive balance morph across all wallet cohorts. This means that FTX collapse has instigated a change in the behavior of BTC holders.
Advice for Crypto Investors
Amidst the FTX financial turmoil and challenges confronting centralized crypto exchanges in this bear market, there is no mincing word that using a hard wallet that guarantees self-custody is the viable option.
Already, a number of industry leaders have advised investors to consider self-custody wallets as the solution to the adverse effects of bear market on exchanges.
On Nov. 13, Ethereum educator Anthony Sassano advised investors not to store their digital assets in any centralized exchange, except for them to conduct their trades.
In the same vein, MicroStrategy former CEO Micheal Saylor corroborated the claim, stressing that self-custody wallet fortifies individuals against possible abuse by centralized exchanges.
The inability of many FTX users to withdraw their funds have continued to be a clog in the wheel, leading to the increased call for stern crypto regulations.
The aftermath of the incident has also led to the indictment of some centralized exchanges like Huobi and Gate.io over manipulation of proof of reserve. Although the allegation has been denied.
