After FTX’s bankruptcy, the number of crypto addresses reached an annual high of 152,936 on 4 December, an increase of 5,541 BTC whale addresses (+ 3.8%) since the beginning of the year (YTD). This comes on the heels of the collapse of the centralized cryptocurrency exchange FTX after it halted customer withdrawals on 8 November.
The collapse of FTX, at the time one of the largest centralized cryptocurrency exchanges in the world, prompted users across centralized exchanges to take custody of their funds. As users withdrew their funds from the centralized cryptocurrency exchanges (CEX), exchange balances declined by $20.7 billion, from $123.6 billion on 2 November to $102.8 billion on 13 November. In less than two weeks, CEX balances of the top six cryptocurrencies had declined by about 16.8%.
FTX bankruptcy and the rise of crypto addresses
The number of whale addresses holding Bitcoin and Ethereum has been on an upward trend this year. However, having peaked during the FTX collapse, one can reflect on the motivation behind this. Whales moving funds from centralized exchanges to self-custody is causing insecurity in the sector on the part of investors.
In the week before the FTX collapse alone, where news had leaked that Binance had not been acquired, nearly 2 billion funds were reportedly withdrawn from exchange platforms.
Going back to 6 November after the Binance CEO’s tweet, which triggered the collapse of FTX’s platform, the number of Bitcoin whale addresses went up radically, compared to the beginning of the year.
When FTX stopped withdrawals on 8 November, the number of BTC whale addresses had increased by 420, or up 0.3% from 6 November, to 151,212 (up 2.6% YTD)
This could be largely due to the fact that whales have joined the withdrawals towards self-custody.
Clearly, this has brought a huge gain for self-custody wallets, both in the short term and in the long term.
Changpeng Zhao disagrees with self-custody of crypto
CZ, during a Wednesday discussion on Twitter Spaces, said:
“For most people, for 99 percent of people today, holding cryptocurrencies for their own account means ending up losing them.”
CZ spoke shortly after advising his staff to prepare for a few “erratic” months, suggesting that reality makes self-custody of cryptocurrencies unrealistic for many:
“Most people do not think about backing up their security keys until it is too late. “Without proper encryption for their backups, they will end up writing them down on a piece of paper and risk having their funds stolen. Worse, if a person were to die without leaving a way to give access to their next of kin, the digital assets would be lost forever. But, with our standard operating procedure, this should not become a problem.”
Whales seem interested in Ethereum
Earlier we looked at how whales are going about managing their funds, but recently there has been noticeable concrete interest from large investors in Ethereum. Ethereum whales have begun to accumulate ETH in significant quantities, not to mention that validators are showing increasing interest, despite declining revenues.
In fact, the number of validators on the Ethereum network has grown by more than 5.50% in the past 30 days; in purely numerical terms, this results in more than 474,000 validators on the network. Of note, these validators have continued to show confidence in Ethereum despite their declining revenue.
