Arman Shirinyan
Billions worth of cryptocurrencies are leaving the market as trust between exchanges and traders suffers
The great migration of cryptocurrencies from exchanges continues: Investors are rapidly closing most of their positions on trading platforms and transferring their funds to cold storage or hot wallets due to the crisis of trust that is emerging between exchanges and their users.
Cryptocurrency exchanges are facing a real crisis following the FTX implosion: unprecedented amounts of Bitcoin, Ethereum and other top-tier cryptocurrencies are leaving centralized trading platforms as investors look for ways to protect their holdings. The trend could continue on the market until the end of the year.
Source: Glassnode
Around 200,000 BTC worth $3.4 billion and more than 1 million ETH left various centralized cryptocurrency trading platforms, according to on-chain data, making it the largest migration of funds from CEX since 2021. Such a trend is indicative of a number of things.
First, the declining amount of assets on exchanges quite often correlates with a downward trend in open interest and general selling pressure in the market. Once traders move their funds away from the open market, they tend to hold them longer compared to the investors who keep their funds in exchange wallets.
How is this affecting the market?
If the trend holds, the selling pressure we saw in November will fall along with volatility. The outflow of funds from the exchanges usually heralds a period of accumulation that will take place just before the general market recovery.
Despite the depression in the macroeconomic sector, the recovery of the cryptocurrency market is still possible even without the rally in the tradfi markets. However, making predictions and setting timeframes is a complicated task, especially leading up to the end of the year.
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