According to research agency Arcane Research, cryptocurrency owners massively withdraw funds from exchanges and crypto lending services, preferring to store them in cold wallets.
The events of the first half of 2022 that took place in the cryptocurrency market forced many holders of crypto assets to reconsider their risk management methods. The collapse of decentralized finance (DeFi) protocols and the bankruptcy of crypto lending platforms have confirmed the thesis – “who owns the keys controls your cryptocurrency.”
Hodlers have been moving their precious #bitcoin out of exchanges like never before following this summer’s collapse of major crypto lenders.
These events undoubtedly damaged the lenders’ trustworthiness, but are hodlers also losing trust in exchanges? pic.twitter.com/v4Tr0rNOaS
— Arcane Research (@ArcaneResearch) August 22, 2022
This trend is especially clearly illustrated by the behavior of bitcoin holders. As a result of blocking or loss of funds, BTC owners began to withdraw their assets from exchanges at an astounding rate. Analysts note that after several years of growing confidence in crypto exchanges and lending platforms, counterparty risk has suddenly become the most important factor.
This was facilitated by a “cascade of negative events that continued until July, when some of the largest participants in the cryptocurrency market collapsed.” So, hedge fund Three Arrows Capital, crypto lender Celsius and broker Voyager Digital are now in one stage or another of bankruptcy. The collapse of these companies led to the blocking of client funds and, most likely, the result will be a complete loss of assets.
“In June, net outflows from exchanges amounted to 119,000 BTC, the highest since November 2020. In July, 96,000 BTC were withdrawn from exchanges. The outflow of funds during the exchange continued in August, and 65,000 BTC were withdrawn in the first 22 days of the month,” the report says.
The total number of bitcoins held on exchanges is now at its lowest level since July 2018. Investors go into “deaf protection” and are reluctant to invest in cryptocurrency investment products. A Coinshares report for the past week shows that the outflow of funds from investment products for digital assets amounted to more than $8 million.
Arcane Research concluded that, in general, crypto asset holders continue to have a positive opinion about the future of the industry. However, they are no longer ready to trust their cryptocurrency to third-party services and have returned to the original idea – to be independent custodians of their own funds.
Earlier, Arcane Research experts, having studied the mining market for 2022, came to the conclusion that the crisis almost led it to collapse and it would take a significant period of time for the sector to recover.
Source: Bits
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