The latest Bitfinex report shows how Investors are pulling Bitcoins off centralized exchanges as a result of the FTX situation and its effects on the industry.
The data that can be viewed on-chain indicates that Bitcoin owners are making withdrawals from exchanges such as Gemini, which according to the Bitfinex report may be derived from keeping these assets in cold wallets.
According to the data shown in the report, centralized cryptocurrency exchanges have seen a steep drop from 2020 all-time highs of 3.1 million BTC to 2.3 million BTC currently on all exchanges. ..
The data from the chain is clear, the events that happened with FTX continue to wreak havoc, and in this case it is the investors who are looking for a safer way to protect digital assets outside of these centralized exchanges.
Proof of this is being felt by the exchange Gemini, which has gone from having 210,000 Bitcoin to 143,000 in just one week, which translates into the output of about 47,000 BTC in just seven days.
In this sense, the report indicates that: “If the on-chain data is consistent, this could lead to discouraged retail investors withdrawing from the cryptocurrency industry in general, since the balances of the self-custody portfolios do not they have risen in tandem with exchange balances, which are drying up.”
The report refers to two groups of bitcoin holders, on the one hand “10-100 BTC sized wallets are the group of Bitcoin holders that have had equivalent outflows on exchanges and aggregated wallet outflows on exchanges. Whales (1-10k BTC balance) serve as local support and resistance, however, BTC whales have been selling and their current wallet balances do not offset exchange outflows. There is a 26 percent lag between BTC moving out of exchanges and then flowing into whale-sized wallets for withdrawals that correspond to more than 100 BTC.”
This presupposes that this relationship of delay in the flow of movement indicates that certainly these centralized exchanges may not be having liquidity and therefore these Bitcoin extractions are being justified. Secondly There is a possibility, according to the report, that the selling pressure of holders and whales continue to increase on the market, patiently waiting for liquidity to exit cash positions..
Now, there is a fact that is no less to take into account and that Bitfinex reveals, and that is that the Bitcoin mining process is at its maximum level of difficulty, which leads to the inference that given the growth of cryptocurrency mining competition, some miners do not support this investment, since the greater the competition, the lower the reward to be distributed and with current prices, the mining business with so much competition is probably not profitable.
To conclude, the report indicates that Long-Term Bitcoin Holders May Be Losing Faithsince at least some 50,100 BTC have changed hands since the FTX collapse. The indicator (SOPR), which would be the volume meter for the sale of old coins (holders), shows that these holders are liquidating their cash assets even with some type of discount or loss.
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