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Centralized Exchanges Record Historical Withdrawals

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.
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
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.
Just having a poke around, and there are three exchanges that have particularly weird $BTC balance patterns of late.
– 🟣Huobi
– 🔵Gate(.)io
– ⚫️crypto(.)comAll three have large jumps, drops, or oscillations on the order of 10k $BTC to $40k $BTC. pic.twitter.com/KI24BVInMf
— _Checkɱate 🔑⚡🦬🌋☢️🛢️ (@_Checkmatey_) November 13, 2022
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.
Unless you're actively trading large size, you shouldn't be storing your assets on centralized platforms for longer than you need to.
I personally use a select few CEXs as fiat on/off ramps and use Ethereum DeFi for everything else (with self-custody of all of my assets).
— sassal.eth 🦇🔊 (@sassal0x) November 13, 2022
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.
My discussion this morning on the virtues of #Bitcoin, the vices of #Crypto, the wisdom of Satoshi, and the future of Digital Assets with @MorganLBrennan, @davidfaber, & @carlquintanilla.pic.twitter.com/LcidKLpfGg
— Michael Saylor⚡️ (@saylor) November 10, 2022
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.
