Analysts warn of more bankruptcies ahead amid the plunge in confidence in digital assets
Investors have withdrawn a record amount of digital coins from global cryptocurrency exchanges amid fears over the safety of their assets following the bankruptcy of major exchange FTX, data from analytics firm Crypto Compare shows.
According to the report, 91,363 bitcoin was pulled out of centralized exchanges such as Binance, Kraken, and Coinbase in November. The tokens were worth roughly $1.5 billion based on last month’s average price of around $16,400.
“Bitcoin recorded the largest outflows from exchanges in its history… Since FTX, centralized exchanges have witnessed a string of outflows as market participants look to safeguard their funds,” Crypto Compare said. It is not clear from the report whether the funds are being sold or moved to private wallets.
Data also showed that the outflow trend has continued in December, with 4,545 bitcoin withdrawn from centralized exchanges in the first seven days of the month, while the same period last year saw inflows of 3,846 bitcoin.
The rush for the exits comes after FTX, a once major brokerage for trading crypto, filed for bankruptcy protection in mid-November. The company’s downfall left as many as 1 million FTX creditors with no access to their assets, dented investor confidence in cryptocurrencies and set off a chain reaction in the crypto market.
In late November, another cryptocurrency lender, BlockFi, filed for bankruptcy. According to Bloomberg, over 130 FTX-affiliated entities have collapsed so far.
Eric Robertsen, global head of research at Standard Chartered Bank, warned this week that the crypto market crisis will continue well into next year.
“While the bitcoin sell-off decelerates, the damage has been done… More and more crypto firms and exchanges find themselves with insufficient liquidity, leading to further bankruptcies and a collapse in investor confidence in digital assets,” he told the Financial Times.
For more stories on economy & finance visit RT’s business section
December 12, 2022 at 03:50PM