Is crypto really dead after the FTX collapse and high trading volumes? Read this story to find out what’s really going on.
The FTX contagion had quickly spread to most other crypto exchanges, with investors opting more and more for self-custody solutions. This caused massive outflows of both Bitcoin and stablecoins from exchanges following the fall of FTX.
According to our research, the speed of Bitcoins exiting exchanges is currently so high that all BTC deposited into exchanges since 2018 has now been withdrawn. The ongoing demand for self-custodial and spot-driven Bitcoin markets continues to grow rapidly. Although Bitcoin economics have historically seen several bear markets, this current trend appears to be unprecedented.
Stablecoins such as BUSD and USDC have been rapidly leaving exchanges in preferance of self-custody over the past week, with Bitcoin following close behind. In a report by on-chain data provider Santiment, they wrote:
The start of the year was rather positive as we saw constant inflow of major stables (USDC, BUSD, USDT) into the cryptomarket, suggesting that new money is coming to perhaps buy the dip (as prices were falling). Major stables’ marketcap eventually peaked out at $134.07 Bn around the same time as the BTC and ETH topped out this year. Since then, it has been a downward slope, accelerated by FED’s first 75 bps hike announcement in June.
Since Binance announced they would convert USDC stablecoins to BUSD, there has been a massive reshuffle in the stablecoin holdings. “If there’s one major lesson the recent events have taught us, it’s self-custody,” notes Santiment. “We saw huge spikes in Supply outside of Exchanges for USDC and BUSD recently, which shows that the market is learning fast.”
The FTX contagion has hit the crypto world hard, with many players feeling the brunt of its effects. Multcoin Capital, a venture fund focused on cryptocurrency, lost around a billion dollars when it held its assets on FTX.
Recently, the crypto market took a sharp turn downward, leading investors to wonder if cryptos are really shutting down for good. However, we’ve seen similar situations in the past with exchanges like Mt. Gox going under suddenly.
The recent market trend of people self-custodying their crypto instead of selling it demonstrates that people still believe in good crypto projects, blockchain technology, and decentralization. However, there have been some significant challenges recently, like institutional players selling BTC after the FTX collapse. It’s too soon to say if crypto is dead at this stage; with a $800 billion market value, it’s still sizeable.