Over $1.5 billion in Bitcoin has been withdrawn from US crypto exchanges in one week

By: Micheal Wilson

November 17, 2022 12:17 PM

There has been a massive exodus of Bitcoin from exchanges to non-custodial wallets as customers get cold feet.

As customers become more apprehensive of security and governmental scrutiny, Bitcoin (BTC ) has flooded out of exchanges in the past week.

Coinglass, an on-chain monitoring tool, has found significant BTC balance drops at U.S. exchanges in particular.

Social media campaigns to raise awareness of the dangers of custodial BTC storage increased after the FTX crisis broke.

Over $3 billion in cryptocurrency was withdrawn in the week following the solvency fiasco, suggesting that users heeded the warning and ordered a record amount of hardware wallets.

Meanwhile, the fallout from FTX is just getting started, and investors' anxiety is rising as regulators plan investigative action and more attention to crypto generally.

According to the numbers, the pattern of currency withdrawals is continuing. For the past week, withdrawals have far outpaced deposits on virtually all the main platforms.

Gemini's weekly drop of about 30,000 BTC is the largest, followed by those of Kraken, Binance, and Coinbase.

The United States, which is expected to play a pivotal role in the FTX drama going forward, has witnessed unusually substantial withdrawals from exchanges.

Ex-CEO Sam Bankman-Fried is apparently going to be extradited to the U.S. from the Bahamas, and senators have set a specific hearing into what transpired at the exchange this week.

Maxine Waters, chair of the U.S. House Financial Services Committee, said, "The fall of FTX has presented great injury to over one million customers." Many of these users were regular folks who had put their life savings into the FTX cryptocurrency exchange, only to see it vanish in a matter of seconds. House Committee on Financial Services Chair Jeb Hensarling, quoted by the media, confirmed that the hearing would be held.

Coinglass data, meanwhile, reveals that not even markets immune to FTX have been able to stop the flight.

For the week as a whole, 134,000 BTC were transferred out of their wallets, which is almost $2.2 billion at the time of writing.

Balance sheet for Bitcoin exchanges. Source: Coinglass

"Severe financial hardship"

Despite rumors of an increase in withdrawals from cryptocurrency exchanges, the typical BTC holder is still deeply in the red and is hence less likely to sell.

This is supported by data from Glassnode, an on-chain analytics firm. Those who have kept their coins for more than 155 days should expect a loss of 33 percent on average.

The last time the average tally was this high was during the bottom of the 2018 bear market, and even then it was rare.

In the notes that accompanied the article, LTHs were described as being in "severe financial trouble."

An annotated graphic of the unrealized losses in Bitcoin LTH. According to Glassnode/Twitter