US Exchange Users Heed Call with Over $1.5 Billion Worth of BTC Moved to Non-custodial Wallets
The increased criticism of custodial wallets following the FTX Group fallout is causing cold feet in the US, where Bitcoin dominates the heavy balance deductions from exchanges. US exchanges are witnessing huge BTC balance reductions as investors become wary of looming regulatory scrutiny and the contagious freezing of withdrawals in FTX affiliates.
FTX Scandal Reveals Risk in Custodial Wallets
The discovery of the FTX scandal and its contagious nature within the affiliates and partner firms has drawn attention to the risk inherent in custodial exchanges and wallets. The revelation of such risks is aided largely by regular tweeting from founders and heads of crypto firms to convey the benefits of self-custody to US BTC exchange users. Users heeding have initiated the mass surge in weekly withdrawals exceeding $3 billion.
The aftershocks of the FTX solvency debacle have promoted investigative action globally as attention is directed to evert crypto risk spreading to the mainstream financial sector. The awareness is fueling the record orders witnessed in hardware wallets as investors lament the absence of comprehensive crypto regulation as causing them endless anguish.
Net withdrawals Across Major platforms
The preference for self-custody wallets has caused reduced balances as net withdrawals outpace deposits in the seven-day run. Gemini has suffered the largest weekly reduction with the 30000 BTC withdrawn. Kraken has witnessed the second biggest withdrawal, followed by Binance and Coinbase. Unsurprisingly, the active role the US has suggested to play following the FTX bankruptcy saga explains the heavy withdrawals witnessed in the country.
Acknowledging the contagious harm caused by the FTX fall, US House Financial Services Committee chair Maxine Waters estimated the casualties to exceed a million users on the exchange losing hard-earned savings. Particularly, the US lawmakers announced initiating a dedicated hearing to investigate FTX ex-CEO Sam Bankman-Fried’s actions. Consequently, increased withdrawals is inevitable as investors are aware of such developments.
Withdrawals Extend to Exchanges Nonexposed to FTX Fallout
Bitcoin withdrawals have extended beyond the exchanges directly linked with FTX. Coinglass figures reveal a weekly exit of 134000 bitcoins estimated at $2.2 billion, from which the US platforms accounts for $1.5 billion.
The exodus arises from the financial distress attributed to investors developing contagion fears from the FTX collapse. While acknowledging the financial distress, the on-chain analysis conducted by Glassnode indicated that long-term holders averaged 33% in decline.
The current decline closely matches the pit witnessed during the 2018 bearish period when the average tally reached 36%. The trend shows increased uncertainty in US is fueling Bitcoin withdrawals from custodial exchanges as the FTX bankruptcy takes shape.
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