Billions Worth BTC Are Leaving the Exchange, and Here Are the Main Reasons
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- Investors losing faith in exchanges
- Traders choose alternative options
A significant amount of BTC tracked by Glassnode left centralized exchanges in March. According to the on-chain data provided, traders and investors withdrew around 61,000 BTC from the trading platform to their private wallets or exchanged cryptocurrency.
Investors losing faith in exchanges
One of the main reasons for the increased exchange outflows may be linked to the general decline in trust in centralized and decentralized exchanges. Although the risk of falling prey to hackers still exists in space, it may not be the main reason for large fund outflows.
Large exchanges have started shutting down some accounts on their platforms, so account limits and overregulation were one of the hottest topics in the space. The CEO of Kraken Exchange, who warned his users about possible regulation coming to cryptocurrency exchanges and urged users to withdraw their funds to private wallets, added further fuel to the fire.
Most of the cryptocurrency exchanges in the space use hot wallet technologies and store the private keys of users’ wallets on their service or certain databases, which are frequently attacked by hackers. But while exchanges properly protect the assets of their clients, they still have to comply with the orders of the regulators of the countries in which they operate.
Traders choose alternative options
Due to the questionable performance of the cryptocurrency market since late 2021, a large section of traders and investors have switched to alternative methods of earning money in the industry such as liquidity farming, staking, and others.
Recently, the Ethereum network celebrated a new milestone with 10 million ETH locked in the Ethereum 2.0 staking contract as the blockchain nears a full switch to the PoS network.