Crypto Exchanges Suffering Major Outflows Even As Bitcoin Soars

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Crypto Exchanges Suffering Major Outflows Even As Bitcoin Soars

Despite rising Bitcoin and other digital currency values, numerous crypto exchanges are seeing significant net capital withdrawals as charges of fraud and manipulation cause market instability amid the industry’s infancy. Withdrawals from trading platforms like as Bitfinex, BitMEX, Binance, and Kraken surpassed inflows by around $622 million in the five-day period ending Wednesday, according to data from TokenAnalyst, a London-based blockchain research business, as documented in the following Bloomberg article.

Crypto Exchanges Seeing Major Net Capital Outflows

  • Bitfinex
  • BitMEX
  • Binance
  • Kraken

Source: Bloomberg

Bitcoin’s Share of Crypto World Increases

It may seem contradictory that cash are being withdrawn from cryptocurrency exchanges at a time when Bitcoin is on the rise. The currency has soared about 100% this year and more than 55% in the previous thirty days, despite turmoil in the larger stock market. Experts believe it’s natural for investors alarmed by instability and bad news in the crypto world to gravitate toward Bitcoin, which they see as the most safe asset in the group.

Bitcoin’s increasing market share as a proportion of the whole crypto world demonstrates this. According to statistics source, it has risen from 53% at the start of the year to 60%.

“The fact that Bitcoin, the obvious quality asset in the market, has excelled in this current surge is most likely due to it not just exceeding the psychologically key $6,000 threshold, but also to some large institutional and/or sovereign purchasing.” “These purchasers would be expected to invest disproportionately in the most proven and validated asset – and that asset is certainly Bitcoin,” said Josh Gnaizda, CEO of Crypto Fund Research, according to Bloomberg.

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To be sure, withdrawals have had an impact on Bitcoin and may potentially influence the currency’s valuation. Net withdrawals of Bitcoin and Ether from Bitfinex have surpassed $1.7 billion since April 26, after allegations that the New York attorney general was investigating the exchange for concealing over $1 billion in losses.

Tether Behind Bitcoin Volatility

According to Bloomberg, Bitcoin’s strong gain last week might have been exacerbated by capital flight from connected Bitfinex and Tether.

“Because Tether is inadequately supported, some of the reserves backing client assets on exchanges are likely insufficient,” said John Griffin, a finance professor at the University of Texas at Austin who has studied cryptocurrency market manipulation. “As a result, wise clients will not store their assets on exchanges and will withdraw their crypto from exchanges.” This might put further upward pressure on Bitcoin prices since people would prefer swap false money for Bitcoin.”

Looking Ahead

While Bitcoin, as the biggest currency in the crypto realm, has its own set of issues, increased institutional interest in trading the asset has helped move Bitcoin into the mainstream, giving it greater stability. Many bulls believe that Bitcoin’s latest rally, despite bad news about fraud and manipulation, signals the end of the “crypto winter.”

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