Crypto awakening: Researcher explains ETH exodus from exchanges

On-chain analytics show that ETH and stablecoins have been flowing out of centralized exchanges in the aftermath of FTX’s collapse.

Blockchain analytics carried out by a Nansen researcher has highlighted outflows of Ether (ETH) and stablecoins from centralized exchanges in the wake of FTX’s collapse.

Nansen research analyst Sandra Leow posted a thread on Twitter unpacking the current state of Decentralized Finance (DeFi), with a specific focus on the movement of ETH and stablecoins from exchanges.

As it stands, the Ethereum 2.0 deposit contract contains over 15 million ETH while some 4 million Wrapped ETH are held in the WETH deposit contract. Web3 infrastructure development and investment firm Jump Trading holds over 2 million ETH tokens and is the third largest holder of ETH in the ecosystem.

The current state of DeFi in @nansen_ai charts

— sandra lmeow (@sandraaleow) November 22, 2022

Binance, Kraken, Bitfinex and Gemini wallets feature in the largest ETH balances list while the Arbitrum layer 2 roll-up bridge also holds a significant amount of Ether.

As Leow explained in correspondence with Cointelegraph, the percentage increase of ETH held in smart contracts can be seen as an indicator of ETH flowing into various DeFi products. This includes decentralized exchanges, staking contracts and custody services.

The recent collapse of FTX may have als led to fears for users holding assets with third-party custodians like centralized exchanges. Leow highlighted the reality that the safety of funds held on exchanges may not be guaranteed:

“There is an amplification for the quote, “Not your keys, not your coins”, and this is especially important given times like these.”

According to Nansen’s exchange flow dashboard, Jump Trading stands out as an entity with significant withdrawal volumes from exchanges in comparison to their deposits. Leow presented a number of possible reasons for Jump Trading’s token movements, noting the firm’s exposure to liquidity hub Serum (SRM) tokens:

“Due to their exposure to the FTX fallout, they had to offload some tokens out of exchanges in need of liquidity. In the last 7D, we’ve seen Jump Trading withdrawing ETH, BUSD, USDC, USDT, SNX, HFT, CHZ, CVX, and various other tokens from multiple exchanges.”

A substantial amount of ETH has flowed out of a number of major exchanges over the past seven days as well. $829 million worth of ETH departed from Gemini, while Upbit saw $797 millions of ETH moved from its account. $597 million of ETH flowed out of Coinbase while Bitfinex also saw around $542 million worth of ETH withdrawn from its platform.

The past week also saw a significant amount of stablecoins moved off exchanges. Stabelcoins worth $294 million flowed out of Gemini, while Bitfinex saw $173 million moved off its platform. KuCoin and Coinbase followed, with $138 million and $108 million of stablecoins withdrawn from the two exchanges respectively.

Leow also unpacked in on the movement of stablecoins, telling Cointelegraph that outflows typically indicate users are on the sidelines and capital is not flowing into the cryptocurrency space:

“Perhaps, the market contagion and prolonged bear market reduces the appetite for traders to be actively investing and involved in the space.”

Nansen has played its part in delivering key insights into major ecosystem events in 2022. The blockchain analytics firm delved into on-chain data to piece together the collapse of Terra in May 2022.

It then followed suit with a deep-dive into FTX’s collapse, with evidence suggesting collusion between the exchange and crypto trading firm Alameda Research. Both firms were created and controlled by Sam Bankman-Fried.

Related Posts

Ripple to tackle $9-trillion dollar market and could serve 50% of world’s population

Ripple is confident that its XRP Ledger is capable enough to handle stablecoins and CBDCs for billions of people across the world. Ripple said that central banks…

Report: AAX Users Storm Crypto Exchange’s Nigerian Offices, Attack Employees

Nigeria users of the crypto exchange AAX, which suspended withdrawals on Nov. 12, reportedly stormed its offices in Lagos and began assaulting employees. Reports that disgruntled AAX…

Polygon partners with Walmart and industry giant Flipkart from India – Will MATIC price rise to $50?

Ethereum layer 2 scaling protocol Polygon enters partnership with Walmart-associated Indian e-commerce marketplace Flipkart  Polygon’s multiple recent partnerships has been boosting the price of MATIC Flipkart, one…

Mysterious Bitcoin miner shows off oldest signature dated Jan. 2009

Answering the question ‘Who has/had the oldest mined Bitcoin?’ an anonymous member shared a signature dating back to January 2009, just a week after Bitcoin came into…

Demand for Cryptocurrency Miners Rises in Russia Amid Low Prices of Hardware

Russia’s market for specialized crypto mining equipment has been seeing high demand over the past couple of months, with buyers attracted by the low price tags. Russian…

How NFTs Can Shape the Future of Music

When people hear of NFTs, the first thing they think of is beautiful but quirky digital images. But those images are only one kind of NFT. NFTs…

Generated by Feedzy