Jamal Al-Farouq Approximately 60,000 bitcoins with an estimated worth of over $2 billion have been withdrawn from centralized exchanges over the preceding 90 days. The available bitcoins on such platforms now tally slightly above 2 million. A recent analysis by Falconx indicates that this severe liquidity contraction has amplified market volatility.
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Substantial Withdrawal: $2 Billion Worth of Bitcoins Removed from Centralized Exchanges in a Three-Month Period
The volume of bitcoins maintained on centralized exchanges has nosedived to its lowest in several years, registering only a scant 36,000 BTC over the 2 million threshold. This sharply contrasts with the 2.513 million BTC that were held on trading platforms as of November 5, 2022.
Within less than a year’s time, exchanges have experienced a depletion of approximately 477,000 BTC. As of July 31, 2023, about 2.096 million bitcoins were reserved on these centralized trading platforms. Based on the existing bitcoin exchange rates, this translates to a substantial withdrawal of $2 billion, equivalent to 60,000 BTC.
The trend is paralleled in the case of ethereum (ETH). According to data from cryptoquant.com, on November 5, 2022, there were 23.14 million ETH held on centralized trading platforms.
By October 30, 2023, this number has reduced to 14.57 million, implying a withdrawal of 8.57 million ethereum valued at approximately $15.64 billion in less than 12 months. Additionally, stablecoins have also been either redeemed by their central issuers or removed from exchanges.
Platforms that managed $35 billion in stablecoin assets as of last November now hold merely $17.34 billion, revealing that over $17 billion worth of ERC20-based stablecoins have been either redeemed or withdrawn.
The acute liquidity shortage is suspected to be a pivotal factor contributing to the recent erratic movements in the cryptocurrency markets. A report released by Falconx on Monday, which references data from Coin Metrics, asserts that the liquidity in the crypto market in 2023 has hit an all-time low. As the bitcoin halving event looms, this liquidity crisis is expected to intensify.
We invite your expert insights and views on this significant reduction in crypto assets on centralized exchanges over the last 90 days and year. Kindly share your thoughts on this matter in the comments section.
Frequently Asked Questions (FAQs) about Liquidity Shortage
What is the main issue discussed in the text regarding centralized crypto exchanges?
The main issue highlighted is the significant liquidity shortage in centralized crypto exchanges. Over the past year, around $2 billion worth of Bitcoin and $15.64 billion in Ethereum have been withdrawn from these platforms, leading to a dramatic reduction in the assets held.
How much Bitcoin has been withdrawn from centralized exchanges in the past 90 days?
Approximately 60,000 bitcoins, valued at just over $2 billion, have been withdrawn from centralized exchanges in the past 90 days. This has reduced the total amount of Bitcoin held on these platforms to slightly above 2 million.
What does the Falconx report suggest about market volatility?
The Falconx report suggests that the acute shortage of liquidity has been a contributing factor to the increased volatility in the cryptocurrency markets. It states that the liquidity in the crypto market for the year 2023 has reached its lowest point.
How have Ethereum holdings on centralized exchanges changed within the last year?
As of November 5, 2022, there were 23.14 million ETH held on centralized trading platforms. This number has dropped to 14.57 million as of October 30, 2023, indicating a withdrawal of 8.57 million Ethereum, valued at approximately $15.64 billion.
What is the status of stablecoins on these centralized exchanges?
Centralized platforms that managed $35 billion in stablecoin assets as of last November now hold merely $17.34 billion. This indicates that over $17 billion worth of ERC20-based stablecoins have been either redeemed or withdrawn.
What implications might the liquidity crisis have for the upcoming Bitcoin halving?
The text suggests that the liquidity crisis is expected to intensify as the Bitcoin halving event approaches, potentially leading to even deeper cycles of liquidity shortages and market volatility.
More about Liquidity Shortage
- Falconx Liquidity Report
- Coin Metrics Data on Cryptocurrency Markets
- Historical Bitcoin Withdrawals Statistics
- Ethereum Holdings on Centralized Exchanges: A Yearly Overview
- ERC20-based Stablecoins: Current Status and Trends
- Upcoming Bitcoin Halving: What to Expect
- Crypto Market Volatility Analysis
