FX.co ★ Bitcoin holders are leaving crypto exchanges en masse

According to the latest data on the outflow of the exchange from Arcane Research, crypto holders are not interested in trading their tokens and, instead, prefer to keep their BTC safe on cold wallets.

The events in the crypto market in 2022 caused many to rethink their risk management practices as the collapse of decentralized finance protocols and bankrupt centralized finance platforms exposed the truth that there is no privacy, no keys, no cryptocurrencies.

As a result of blocking or loss of funds, bitcoin holders began to withdraw their capital from exchanges at an astounding rate.

According to a report published by Arcane Research, deposits began to flow away from both crypto exchanges and lenders.

Arcane Research cited the collapse of Terra Luna.

This includes the now-defunct crypto hedge fund Three Arrows Capital, crypto lender Celsius, and crypto brokerage Voyager, which are now in bankruptcy.

As these firms collapsed, client funds were blocked and could not be withdrawn, and it is becoming increasingly likely that this will be a complete loss for many of the participants.

Because of this, years spent building trust in exchanges and lending platforms have evaporated, and crypto holders have begun withdrawing their funds en masse from both crypto exchanges and lenders.

The net outflow from exchanges in June was 119,000 bitcoins. This was the highest outflow since November 2020. July also saw a massive outflow, with 96,000 bitcoins being withdrawn from exchanges. The outflow of funds from the exchange continued in August, and 65,000 bitcoins were withdrawn in the first 22 days of the month.

As a result of the outflow, the number of bitcoins held on exchanges is now at its lowest level since July 2018.

Investors are also more reluctant to invest in cryptocurrency investment products, as the latest report from Coinshares shows that the outflow of funds from digital asset investment products was $8.7 million for the week.

Overall, while crypto holders continue to hold on to their beliefs about the future of the asset class, they are reluctant to trust others to hold their tokens and have instead reverted to the original crypto idea of being their own bank.