After FTX Collapse, Bitcoin Holders Make Self-Custody Moves In Big Numbers

It took less than a week for a giant crypto exchange like FTX, having $32 billion valuations, to collapse into ashes. After Mt. Gox, this is the second such incident regarding the collapse of a centralized exchange, over the last decade.


Considering that FTX was the world’s second-largest exchange after Binance, its fall shows the fact that nothing in the crypto space is too big to fail, especially when you run into liquidity issues.


Following the FTX episode, investors’ trust into centralized exchanges is now on a decline. As per on-chain data provider Glassnode, a lot of investors are opting for self-custody amid a huge spike in the on-chain activity for Bitcoin.


The on-chain data provider noted: “Exchanges have seen one of the largest net declines in aggregate BTC balance in history, falling by 72.9k BTC in 7-days. This compares with only three periods in the past; Apr-2020, Nov-2020, and June to July 2022”.


This is for the third time in the history that outflows of 106,000 BTC per month have been witnessed. However, as the Bitcoin price crashed to a new 2022-low last week, long-term holders took this opportunity to fill their bags.


Glassnode explained that all cohorts of BTC wallet holders, from shrimps to whales, saw a surge in their Bitcoin wallet addresses. Smaller wallets holding less that one Bitcoin added a total of 33,700 BTC last week. This led to a monthly surge of 51,400 Bitcoins, which is the second-largest balance inflow in the history.


Just like Bitcoin, Glassnode made a similar observation for Ethereum as well. A staggering 1.1 million ETH left centralized exchanges over the last week. This is the largest balance decline of ETH on centralized exchanges since September 2020.


On the other hand, stablecoin inflows at exchanges have shot up significantly. The Glassnode report shows: “Whilst BTC and ETH exchange reserves declined this week, stablecoins have on net flowed into exchanges, with over $1.04B in combined USDT, USDC, BUSD and DAI flowing in on 10-Nov. This makes for the 7th largest daily net inflow in history”.


After a brutal price crash over the weekend, the broader cryptocurrency market is showing a little stability with less volatility.