As Bitcoin moves into self-custody wallets at near-record levels, it seems that trust in centralised exchanges is eroding.
A week after the demise of the world’s second-largest cryptocurrency exchange, Bitcoin BTC investors are progressively transferring their holdings to self-custody options.
According to analytics firm Glassnode, on-chain exchange traffic data reveals an increase in withdrawals to self-custody wallets.
In a tweet published on November 13, Glassnode revealed that monthly Bitcoin exchange outflows had reached near-historic levels of 106,000 BTC.
In addition, this has only occurred three additional times: in April 2022, November 2020, and June/July 2022. On November 9, it was announced that the number of Bitcoin wallets receiving the asset from exchange addresses increased to around 90,000.
Following the collapse of FTX, #Bitcoin investors have been withdrawing coins to self-custody at a historic rate of 106k $BTC/month.
Typically, exchange outflows are a positive indicator that BTC is being held for the long run. In this instance, though, it looks to be the outcome of dwindling trust in centralised cryptocurrency exchanges.
Glassnode commented that outflows have resulted in “positive balance changes across all wallet cohorts, from shrimp to whales,” before adding:
“The failure of FTX has created a very distinct change in #Bitcoin holder behaviour across all cohorts.”
Since November 6, when the FTX debacle started, balance movements have grown across all BTC wallet sizes, with “shrimps” containing less than one coin growing by 33,700 BTC. The growth of 3,600 BTC in whale wallets containing more than 1,000 coins indicates that the self-custodianship drive is occurring across the board.
The term “not your keys, not your coins” has more weight than ever before, and industry experts are beginning to push for self-custody solutions.
Ethereum instructor Anthony Sassano said on November 13 that cryptocurrency users should not store their funds on centralised exchanges unless they are actively trading huge sums.
Michael Saylor of MicroStrategy said in an interview that self-custody prohibits centralised third parties from misusing their authority.
Glassnode also observed that stablecoins, many of which destabilised last week, have been entering exchanges at a faster pace during the previous week.
More than $1 billion in stablecoins arrived on controlled exchanges on November 10. It said that the total stablecoin reserve across all exchanges it monitors hit a fresh record high of $41.2 billion.
“The echos of the FTX collapse will likely act to reshape the industry across many sectors, and shift the dominance, and preference for trustless vs centrally issued assets,” it concluded.
