Over 200,000 BTC And More Than 1M ETH Moved From Centralized Exchanges (CEXs) Amidst FTX Contagion
There is no end in sight for the massive movement of crypto tokens from exchanges as investors continue to close most of their trading positions and transfer their assets to cold or hot wallets. Thanks to the FTX debacle, exchanges are in a crisis over the safety of funds, and it will not get better soon.
Over the past few weeks, there has been an unprecedented movement of a large stash of BTC, ETH, and other digital assets as the crisis facing crypto exchanges worsen. With the collapse of FTX, investors are increasingly looking for an alternative place to keep their holdings.
They consider centralized trading platforms as too insecure. Thus, the demand for self-custody wallets and other custodial platforms is rising.
However, the most worrying thing about the current trend is that it will likely persist until the end of the year or continue until next year. As per on-chain data, 200,000 BTC tokens valued at $3.4 billion and over 1 million ETH have left several centralized crypto trading platforms in the wake of the FTX collapse.
This makes it the most significant migration of digital assets from CEXs since last year. Meanwhile, such a trend shows negative sentiments for the broader crypto ecosystem as the bear trend continues.
First, the decline in the number of assets on various exchanges indicates decreasing interest in cryptocurrency. It also indicates an overall rise in the selling pressure of digital currencies.
As traders move their assets away from exchanges, they will likely hold the fund longer than investors who leave their funds in exchange custody. Besides, it usually takes way longer for traders to do anything with their holdings, which significantly impacts the supply of crypto assets and the broader market liquidity.
Will This Impact The Broader Market?
If the above scenario persists, the selling pressure the market witnessed back in November will go downhill, and volatility will reappear. It is worth noting that fund outflows from trading platforms signify an accumulation period, which usually happens before an overall market recovery.
The spectacular collapse of FTX has left investors scampering to save what remains of their funds. As a remedy, investors have flocked to decentralized exchanges (DEXs).
Hence, platforms offering complete decentralization services have seen a spike in users following the FTX debacle. With decentralized exchanges, users can easily trade any amount on any chain by connecting their wallets.
Unlike centralized exchanges, where there is much secrecy about how funds are used, DEXs give token holders the freedom to do what they want with their funds. Meanwhile, there is yet to be a timeframe for the digital asset industry to recover from the current crypto winter.
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