Cryptocurrency holders, according to data from Glassnode, they would be withdrawing large amounts of Bitcoin from centralized exchanges. This fact could be an indicator that the main digital currencies enter a stage of accumulation. The aforementioned analysis site assures that the amount amounts to 2,000 BTC daily.
Report Week-on-chain published last Monday, it explains that the cryptocurrency output of exchanges is similar to that of April. Back then, the price of Bitcoin reached its historic peak of close to $65,000 per coin. Right in that phase, cryptocurrency holders were in the process of withdrawing from those platforms.
With the price of the leading cryptocurrency falling by almost 50%, the flow changed course. Meanwhile, bitcoins moved back from private wallets to exchange platforms to be liquidated. Thus, the report of Glassnode he concludes that these coins could be destined for the fund Grayscale Trust Bitcoin (GBTC) and other institutional portfolios.
Why does Bitcoin leave exchanges in large quantities?
The fact that holders of large amounts of cryptocurrencies are moving their Bitcoin fortunes out of exchanges, becomes striking. In that sense, moving 2,000 bitcoins daily to sites outside the centralized exchange platforms, could be a clear sign of accumulation.
Consequently, the current low volatility of the price of the pioneering digital currency could be exploited by expert investors. With a price that moves little and well below the value it presented until May, Bitcoin could be seen as an opportunity. Affordable currency prices could be driving a new wave of accumulation.
These build-up stages usually take weeks or months, depending on the intensity. The truth is that they conclude with significant price increases. It is possible that these movements detected by Glassnode, may be the harbinger of a bullish race in the price of Bitcoin.
But there is another explanation that these large amounts of Bitcoin are moving daily out of exchanges. One that has little to do with investors ‘ bullish aspirations, but with an instinct to protect your funds.
FBI warns of possible attack against exchanges
The U.S. Bureau of Federal Investigations (FBI), alerted cryptocurrency holders of a possible massive attack on the exchanges. The information was pointed out by important news portals and the attack could be planned for this week.
The methods of criminals, warns the FBI, could be various, from usurpation of accounts to technical support fraud, SIM exchange, among others. The objective would be to violate some exchanges and keep their users ‘ funds.
It should be noted that cryptocurrency theft is one of the most difficult to combat. This is because criminals take advantage of the privacy and irreversibility advantages of the Blockchain to hide the stolen funds. If you add to this that some convert the amounts into untraceable cryptocurrencies, the task of locating them could be considered hopeless.
The reports received by the FBI, according to quoted media, indicate that there is a growing trend of theft with SIM exchange (SIM Swap Fraud). The latter could mean that criminal methods are being perfected and a massive attack could be in preparation. This alert, would be behind the large amounts of Bitcoin mobilized from the exchanges towards safer wallets.
Accumulation or precaution?
Given the context, it can be said that there are two big reasons for large amounts of Bitcoin to leave exchanges. The first is that the cryptocurrency enters a stage of accumulation prior to a new bull run that will help it regain lost ground. The second, because of fears that the attacks SIM Swapping they’re becoming a real threat.
In the latter case, it should be noted that this type of attacks gains notoriety, since they are usually very effective. It consists of usurping the SIM of the victims to violate the security of 2 steps. Generally, these attacks occur through complicity or negligence on the part of phone companies.
In that sense, once the offender usurps the victim’s SIM, he has few obstacles within a exchange. In this type of environment, it is advisable to remain calm and not fall into the FUD. Then review the security measures and if you are not satisfied with those offered by the exchange, find another platform. Ultimately, safeguard in wallets off-line.
Most computer security experts always recommend keeping exchangeable amounts on exchanges. That is, amounts not related to savings, but those intended to spend or make trading. Savings, must be safeguarded in wallets cold or, at least, in those that offer the private keys.
Glassnode report provides added peace of mind
The outflow of large amounts of Bitcoin from exchanges is not a rare occurrence within the cryptocurrency trading environment. This phenomenon was observed until last May and did not translate into threats of attacks against the security of the platforms. On the contrary, it was a process of accumulation.
In the current case, the signals that Bitcoin is accumulating are perhaps greater than the FUD produced by the FBI alert. This alert, dated less than 48 hours ago, while the migration of currencies outside centralized platforms takes longer.
In fact, the report of Glassnode offers degrowth comparisons over a week. In simple words, cryptocurrency exchanges have been running empty since long before the authorities ‘ alert. Such an alert is likely to help increase the trend. However, it would not be the main reason for 2,000 BTC leaving the custody of those firms daily.
Defis would also be behind the process
A third protagonist in this intriguing story is Decentralized Finance (DeFi). It should be noted that the use of dApps is accentuated in times of low Bitcoin price volatility. Whales tend to look for environments more profitable for their fortunes.
Last year 2020, when Bitcoin volatility entered a long stage of stagnation, DeFi were the protagonists. The Total Blocked Value (TVL) in these protocols was predicted to reach the equivalent of $ 5,000 million by the end of that year. However, the figure was several times larger.
On the other hand, with the bull-run of Bitcoin, Defis lost considerably the prominence. However, now with the stagnation of the cryptocurrency’s market value, large amounts of investors would be moving their Bitcoin funds towards those protocols.
To provide data on this last hypothesis, the DeFi Llama site reports a considerable growth of TVL since last June. The increase in blocked capital would be 21%, rising from $92 billion to $111 billion since June 26.
Data to consider
- 2,000 BTC are leaving centralized cryptocurrency exchanges daily.
- Where they’re headed, it’s a mystery. It is speculated that there are three possibilities that encourage holders to take their funds from these platforms.
- The first of these is the beginning of a stage of accumulation. Holders do not need to have their coins on exchange platforms. If your intention is to accumulate and not sell, they prefer to withdraw them to safer sites.
- The second possibility is the FUD created by a recent FBI alert. According to this alarm, hackers would be preparing a massive attack on exchanges this week.
- The third possibility is that, given the low volatility, investors migrate to defis.