Traders are withdrawing 2,000 BTC from centralized exchanges daily


Yesterday, Bitfinex, the most popular centralized trading platform for cryptocurrencies announced that it lost 120,000 bitcoins ($72 million) in a security breach. The theft occurred through the company’s theft-prevention system known as “Tether.” This is the second time Bitfinex has fallen victim to a hack. Some of the stolen crypto was “tethered” to the dollar and was used to facilitate short sell trades by various traders.

The volatility of Bitcoin and other large cryptocurrencies has gotten the attention of investors, and that has led to some bad news on the cryptocurrency exchange front. In the past few weeks, a number of exchanges have closed and, in some cases, been hacked. In addition, traders have been withdrawing huge sums of Bitcoin and other cryptocurrencies from exchanges, leading to a sharp decline in the value of these cryptocurrencies.

The number of Bitcoin held on centralized exchanges has consistently fallen since late May, with roughly 2,000 BTC (worth roughly $66 million at current prices) flowing out of exchanges daily.

Glassnode’s July 12 Week On-Chain report found that Bitcoin reserves on centralized exchanges have fallen back to levels not seen since April, the month that saw BTC blast to its all-time high of roughly $65,000.

The researchers noted that during the bull run leading up to this peak, relentless depletion of exchange coin reserves was a key theme. Glassnode concludes that much of this BTC went to the Grayscale GBTC Trust or was accumulated by institutions, driving “a persistent net outflow from exchanges.”

However, when Bitcoin prices slumped in May, this trend reversed as coins were sent to exchanges for liquidation. Now, the net transfer volume has moved back into negative territory again as outflows increase.

“On a 14-day moving average basis, the last two weeks in particular have seen a more positive return to exchange outflows, at a rate of ~2k BTC per day.”Net BTC transfer volume to/from exchanges: Glassnode

Traders are withdrawing 2,000 BTC from centralized exchanges daily

The report also noted that the proportion of on-chain transaction fees represented by exchange deposits declined to 14% dominance this past week, following a brief peak to around 17% in May.

On-chain fees associated with withdrawals saw a notable bounce from 3.7% up to 5.4% this month, suggesting an increasing preference for accumulation over sales, it added.

Related: Bitcoin price falls under $33K, but on-chain data hints at BTC accumulation

The fall in exchange reserves appears to have coincided with an uptick in capital flows to decentralized finance protocols over the past fortnight.

According to DeFiLlama, the total value locked has increased by 21% since June 26 as it climbed from $92 billion to $111 billion.

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Emilia James
By Emilia James

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