After seeing several centralised exchanges compromised, and with safety and security in mind, investors are pulling their crypto off of exchanges at a record rate.
The crypto flight to safer venues is a trend that is being seen across the board, with investors leaving exchanges, many of them choosing to self-custody their own crypto assets.
Probably the most notable reason for the flight is that of contagion fears after the FTX collapse. Many institutional as well as retail investors would certainly be eyeing exchanges with far more caution now, especially given that the FTX run also came on the back of several crypto lending platforms that went into bankruptcy, further exacerbating the problem of scarce liquidity.
Large Bitcoin Outflows
In a report on Investment Week, CryptoCompare is quoted on the amount of cryptos leaving exchanges. For the month of November, 91,557 bitcoins worth nearly $1.5 billion left exchanges that included Binance, Kraken, and Coinbase.
A Maturing Market
The trend is also indicative of a maturing crypto-investment market, with investors taking a more strategic approach to their investments. Long-term holders are looking to take advantage of the potential appreciation of their cryptocurrencies over time, while investors looking for short-term gains are looking to take advantage of the volatility of the crypto markets.
It could be argued that the trend is also driven by the increasing sophistication of the crypto-investment landscape. As more investors become aware of the potential of cryptocurrencies, they are more likely to be looking for opportunities to diversify their portfolios.
This is leading to investors leaving exchanges to pursue other investment opportunities. These include an increasing number of crypto-related products available to investors like derivatives, in the way of futures, options and swaps, as well as a range of funds and ETFs.
These products are enabling investors to take advantage of the crypto markets in a more efficient and cost-effective way.