This year has witnessed many black swan events that tested investors’ trust. As per data from Glassnode, an on-chain analytics firm, 450,000 Bitcoins held on an exchange or hot storage before 2022 have been moved to cold storage throughout the year.
In the last 12 months, the challenging events in the market led to around 550,000 Bitcoin abandoning exchanges’ reserves.
On several occasions, the reserves shrunk severely, like in December, June, and November. Talking of individual exchanges, in December, Binance lost 90,000 Bitcoins in seven days, whereas in June, FTX lost 70,000 Bitcoins in two weeks, and finally, Coinbase lost 200,000 Bitcoins within four days in November.
Data suggest that the exchanges started the year with just below $2.8 million in Bitcoins and are closing it at around $2.25 million, which equals a drop of around 20%. The current Bitcoin reserves on exchanges equate to less than 12% of the total Bitcoin supply.
While Bitcoins have rapidly left exchanges, this year also witnessed many Bitcoins adopting self-custody. The Glassnode graph below represents the illiquid Bitcoin supply level throughout the year.
As we can observe, the illiquid Bitcoin supply was recorded as 14 million in January and above 15 million in December. This indicates that 78% of the circulating Bitcoin supply is currently held in cold storage.
Amongst the phases that witnessed the rapid withdrawals of cryptocurrencies from exchanges, the past weeks following the collapse of FTX on November 5, 2022, have been one such.
As per data from CryptoQuant, an on-chain data provider, 356,848 Bitcoins worth $6.02 billion using current bitcoin exchange rates have been removed. This tenure which is close to two months, has experienced the largest values of Bitcoin and Ethereum withdrawals all year.
Figures of Bitcoin and Ethereum held on exchanges reveal that on December 26, 2022, there were 2,151,925 Bitcoins held on centralized exchanges, whereas, on November 5, there were around 2,508,773 Bitcoins on crypto trading platforms.
As of November 5, there were roughly 22,528,626 Ethereums held on centralized exchanges, whereas the exchanges currently hold 18,045,150 Ethereums. The present number is about 4.48 million fewer than around two months ago.
Using current Bitcoin and Ethereum exchange rates, it can be estimated that around $11.53 billion has been removed from centralized exchanges. Additionally, a significant share of stablecoins has also been withdrawn from exchanges over the last 51 days.
Right before the collapse of FTX, there was an estimated value of $35.20 billion in stablecoins like Tether USD (USDT) AND USDC held on trading platforms. However, since then, $7.669 billion worth of stablecoins have been removed.
Reportedly, the withdrawals have slowed since December 20, whereas Bitcoin deposits have increased. The on-chain figures reveal that Bitcoin exchange outflows touched their lowest levels since June this year.
Simultaneously, Ethereum withdrawals also slowed on December 20 but haven’t increased much, whereas stablecoin withdrawals continue.
In relation to many withdrawals in the past two months, the crypto’s economy was valued at $1.06 trillion on November 5 and has been down more than $246 billion since then. The current value is estimated at $815.56 billion.
On November 5, Bitcoin was valued at $21,351.98, while Ethereum was at $1,649.88. Along with the withdrawals of Bitcoin, Ethereum, and stablecoins, top-ten cryptocurrencies, including Ripple (XRP) and Dogecoin (DOGE), alongside others, also saw significant withdrawals during the phase.