Rational response: Self-custodyThis travesty has revitalized the “not your keys, not your coins” sentiment and re-injected healthy skepticism among market participants. In the current environment, prudence is essential, and you should be very cautious with whom you trust to hold your crypto if you keep your crypto on an exchange. Crypto owners are responding by moving coins off exchanges. From November 1 to November 12, the BTC balance on exchanges fell by 66,472 BTC per Glassnode, a percentage decline of 2.8% from 2.36m to 2.3m BTC on exchanges. The decrease in ETH on exchanges has been even higher, falling 6.6% in the same period. Almost all exchanges experience growing withdrawals at the moment.
This is a slow bank run, with people moving their coins into self-custody. If any other exchanges are running similar schemes to that of FTX, this may expose their skeletons in their cupboard, as liabilities cannot be met. This article is a part of the the deep-dive section of our new market report: Ahead of the curve.
Source: Glassnode Exchanges in the chart are sorted by largest current BTC balance to smallest.