“Not your keys, not your coins” has taken on more significance than ever in today’s bear market. After the bankruptcy of FTX, crypto investors are massively suspicious of crypto exchanges and is self custody suddenly become a lot more popular. This means that you yourself private keys and thus have full control over your bitcoin (BTC) or other cryptocurrencies. This mistrust of exchanges is clearly reflected in the bitcoin outflow from exchanges. According to data from Glassnode monthly bitcoin outflow from exchanges has a new all time high achieved.
BTC outflow
The relevant indicator here is the ‘exchange net position change’, which measures the net amount of bitcoin moving in or out of the wallets of centralized exchanges. When the value of this indicator is positive, it means that investors have sent more bitcoin to the exchanges than they have withdrawn from it. One reason for investors to send their BTC to an exchange is to sell it.
On the other hand, if the value of this indicator is negative, it means that more bitcoin has been removed from the exchanges. This is generally bullishas investors send their bitcoin to an external wallet to hold it for the long term.
In recent weeks, this indicator has been consistently negative, which means that more bitcoin is being withdrawn from the exchanges. In the past month, it was a whopping 172.7k BTC, which is the highest outflow in the entire history of the king of cryptocurrencies.
Downfall FTX
The high outflow is often due to the fear that other parties will follow FTX and also fall over. Investors no longer trust centralized parties and are increasingly taking matters into their own hands, for example with a hardware wallet. For example, you could read earlier that hardware wallet Trezor had a significant increase in sales revenue since the demise of FTX. Competitor Ledger even faced scalability challenges due to the massive use of their platforms after FTX went under.