Dwindling interest in crypto trading this year was dealt an even more severe blow by the sudden collapse of FTX
If 2022 was a bad year for cryptocurrencies, November is turning out to be the most horrendous month for digital currencies this year. The collapse of the crypto exchange FTX and the subsequent bankruptcy declaration has sucked out the trading interest in the space, at least in the short term. This has exacerbated an already worsening situation. Going into November, crypto spot trading volume was already at its lowest in almost two years.
According to the data provided by CryptoCompare (top chart above), crypto spot trading volume had already hit the lowest level since December 2020. Spot trading volume on centralized exchanges fell 25.4% to $929 billion. Binance remains the largest centralized exchange by spot trading volume, with a market share of 42.0%. However, spot trading volume on the exchange fell 27.8% to $390 billion, the lowest volume since December 2020.
While the top chart presents a longer-term perspective before November, the bottom chart on the left analyzes Bitcoin’s net flows on the centralized exchanges in 2022. Weekly Bitcoin net flows from centralized exchanges recorded their largest ever outflow, with 97,805 BTC moving off exchanges in the 7-day period ending on November 13. This was the biggest outflow recorded this year, precipitated by the collapse of FTX.
The final chart on the bottom right presents an even uglier picture of how investors took the exit in the week in which FTX-related events unfolded. The damage wasn’t restricted to Bitcoin, as many investors/traders bailed out Ethereum and even stablecoins, which are usually considered a safer option due to their pegging to fiat currencies.
Currently, the only visible silver lining is that the Bitcoin whales have intensified accumulation. According to the analytics platform Santiment, BTC has recorded a large increase in the number of addresses holding between 0.1 to 100 BTC. Since November 7, the count of these addresses has grown by 9%, with over 125,000 addresses sized between 0.1 to 100 BTC created since then.
While the last metric points to investors being bullish in BTC for the long term, as is the case with Whale ‘hodlers’ — in the short & medium term traders’ sentiment has taken a major hit with the negative bias. Loss of trust in the centralized exchanges along with a broader bearish sentiment in the markets is keeping the investors/traders out of action, for now. Tomorrow is always a new day.
Originally Published on Medium
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