On the 27th of November, a Reddit user shared a crypto analysis. Over 179k BTC have been withdrawn from exchanges in the past 30 days. That’s a new record and very unusual for a price downturn.
With all the damages the FTX crash wrecked on the crypto world, the one good thing it achieved was to build a distrust for centralized exchanges. With over $2.9 billion withdrawn from Binance and Coinbase, people finally realize the full implications of “not your keys, not your crypto.”
Referencing the FTX situation, there were rumors of Sam Bankman-fried and FTX employees purchasing cars and houses with user funds. This brought a legitimate fear regarding keeping their crypto assets in centralized exchanges, as they now know that it is truly not in their custody at all, and exchanges aren’t trustworthy. They are probably more interested in spending and gambling away user funds.
The anecdotal evidence of the fear shows that people are going against the trend. Usually, users buy when the price reduces and sells when the price increases. Yet during the past month, users have been withdrawing their assets even with reduced prices.
Though official statistics do not back it, the trend shows a big downturn due to the FTX collapse and panic. Meanwhile, people were withdrawing rapidly from exchanges at a highly unusual rate. It supports the thesis that people got so scared away from FTX-collapse that they are finally starting not to trust centralized exchanges.
The analysis was accompanied by mixed comments. While some believe the development is for the best, while others believe that users don’t learn, which would lead to the same tragedy in the future. The concept of “not your keys, not your crypto” has existed for a while, and the FTX crash isn’t the first of its kind.
Since blockchain tech was built to bypass the need for third parties and centralized financial intermediaries. Hopefully, the current trend of distrust for centralized exchanges will usher in a new era of self-custody. Bringing the crypto industry back to its true path.