Investors are withdrawing record levels of bitcoin from cryptocurrency exchanges as concerns over the safety of assets rise after Sam Bankman-Fried’s FTX collapse.
Once a crypto industry darling, FTX filed for bankruptcy protection in mid-November after an $8 billion hole in its balance sheet.
New CEO John Ray Lack of basic risk management Bankman-Fried acknowledges that its internal controls are inadequate. Its rapid decline spooked investors who store and trade assets on other centralized cryptocurrency exchanges, with withdrawals of Bitcoin, the most widely traded cryptocurrency token, hitting record levels. has reached FTX went bankrupt last month with over 1 million of his creditors, including many who had left assets on the exchange.
Last month, investors withdrew 91,363 bitcoins, worth nearly $1.5 billion in total, from centralized exchanges such as Binance, Kraken and Coinbase, based on an average November price of around $16,400. According to CryptoCompare data, this marked the largest Bitcoin outflow on record.
It’s unclear if the coins are being sold or transferred to private wallets.
There will be a rush to the exit as the price of Bitcoin plunges 64% this year and is currently trading around $17,000.
October withdrawals were also high at 75,294 BTC, following a crisis-filled summer that included the bankruptcies of digital asset lenders Celsius and Voyager Digital, as crypto traders withdrew.
Rival exchanges are scrambling to distance themselves and their practices from the chaos within FTX. Relieve customer tension Limit potential market contagion.
But record outflows highlight investor wariness over Bitcoin facing the digital asset industry Increased scrutiny from global regulators.
According to CryptoCompare, 4,545 bitcoins were withdrawn from centralized exchanges in the first seven days of December. This compares to his 3,846 bitcoin inflow in the same period last year.
In a sign of the detrimental effects of FTX’s demise on former rival exchanges, credit rating agency Moody’s cited a “increasing likelihood of continued declines in trading volumes and customer engagement” as the U.S. listing put its Coinbase bond rating on review for downgrade in late November. , two key revenue drivers.
“Crypto-asset price declines will limit the ability of firms to raise capital and dampen customer demand,” Moody’s analysts wrote this week. They added that a significant drop in cryptocurrency prices would “degrade the creditworthiness of centralized financial firms.”
“Bitcoin sales are slowing, but the damage is done,” Eric Robertsen, global head of research at Asia-focused bank Standard Chartered, wrote this week.
He predicted that the pain of cryptocurrency investors will continue until 2023.