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FTX infection causes fear among whales and old hands

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While the contagion effects of the FTX crash are still not fully assessable, Bitcoin whales and OGs seem to be playing it safe.

Notably, the fate of the bankruptcy of Genesis Trading, DCG, and Grayscale hangs over the bitcoin market like a sword of Damocles. This uncertainty is particularly evident in the group of bitcoin whales and long-term currency holders.

As Glassnode notes in the latest version ReportRecent on-chain data indicates that “the confidence and financial position of whales and old Bitcoin hands has been shaken by the event.”

Whales, corporations and trading firms account for a larger share of exchange deposits, according to Glassnode. The average deposit size across all major exchanges has increased significantly.

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This is a trend seen in other late stages of the bear market, such as that of 2018-19. Also, a similar trend emerged in the late May post LUNA device breakdownUniversity of Science and Technology project.

Glassnode infers from the data that the driving factor could be the financial status of the whales (holders of >1k BTC). The average whale pool payout price since Binance was created, on July 5, 2017, is currently $17,825.

With the spot currently below $16,000, this is the first time since March 2020 that the whale group has experienced an unrealized loss. “In response, whales have already been depositing coins on exchanges, with an excess of between 5,000 and 7,000 BTC per day in net inflows over the past week,” Glassnode said.

It’s not just bitcoin whales showing weak hands

However, not only whales, but also long-range owners have a weakness on their hands at the moment. Thus, spending by long-term bitcoin holders is on the rise.

According to Glassnode, the Spent Volume Age Bands (SVAB) metric shows that just over 4% of the total volume spent this week came from coins older than three months, the highest level in 2022.

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“This relative size coincides with some of the largest in history, and is often seen during large-scale surrender and panic events,” according to the research firm.

At its 5th all-time high, BTC volume is more than 6 months old. As Glassnode notes, more than 130,600 BTC have been spent on November 17 alone. The 7-day average is now 50,100 BTC per day.

Ago FTX breakdown, a total of 254,000 BTC spent over 6 months ago. This is about 1.3% of the circulating supply. On a 30-day basis, this is the highest since the January 2021 bull market, when long-term investors took profits.

According to Glassnode, it remains to be seen if the current on-chain trends are short-term in nature or if there is a deep loss of confidence in the Bitcoin market, due to the Sam Bankman-Fried scam scheme:

[A] The slowing and tracking of these metrics would suggest that this could be a short-term event, but with each passing day that these trends continue, it becomes increasingly plausible that there is a broader decline in confidence.

At press time, bitcoin price is just hovering around yesterday’s fresh bear market low at $15,478.

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Bitcoin is hovering above a fresh bear market bottom, hourly chart. source: TradingView

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Cryptocurrency

How to keep your cryptocurrency safe after the FTX crash

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The fall of cryptocurrency exchange FTX has forced many to reconsider their general approach to investments — from self-holding to checking for on-chain funds. This shift in approach was mainly driven by the distrust of crypto investors in the entrepreneurs after they were deceived by the CEO and co-founder of FTX. Sam Bankman-Fried (SBF).

FTX crashed after SBF and its partners were caught secretly reinvesting users’ money, leading to a Loss of at least $1 billion of customer funds. Efforts to restore investor confidence have led to rival cryptocurrency exchanges proactively boasting of proving their reserves to confirm the existence of users’ funds. However, community members have since demanded that exchanges demonstrate their commitment to protect reserves.

With SBF, the self-proclaimed “Most Generous Billionaire,” committing fraud in broad daylight with no apparent legal implications, investors must maintain a defensive stance when it comes to protecting their investments. To protect assets from fraud, hacking, and misappropriation, investors must take certain measures to maintain complete control of their assets—often considered a best crypto investing practice.

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Transfer your money from cryptocurrency exchanges

Cryptocurrency exchanges are widely used to buy, sell and trade cryptocurrencies for a small fee. While other methods, including peer-to-peer and outright selling, are always an option, the higher exchange liquidity allows investors to match orders and ensure they don’t lose money during a transaction.

The problem arises when investors decide to keep their money in wallets owned and offered by the stock exchanges. Unfortunately, this is where most investors learn the “not your keys, not your coins” lesson the hard way. Cryptocurrencies that are stored in wallets provided by the exchange are ultimately in the possession of the owner, which in the case of FTX users, has been abused by the SBF and its partners.

Avoiding these risks is as simple as moving funds from an exchange to a wallet without shared private keys. Private keys are secure cryptocurrencies that allow access to funds stored in crypto wallets, which can be recovered using a backup phrase in case they are misplaced.

Hardware wallet: The safest bet for storing cryptocurrency

Hardware wallets provide complete ownership of the private keys of a crypto wallet, limiting the funds’ access to only the owner of the hardware wallet. After purchasing cryptocurrencies from an exchange, users must voluntarily transfer their assets to a file hardware wallet.

Once the transaction is completed, the owners of the cryptocurrency exchange will not be able to access the fund. As a result, investors who choose a hardware wallet will not risk losing money due to scams or hacks that happen across the exchanges.

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Related: What is a bitcoin wallet? A beginner’s guide to storing bitcoin

However, while hardware wallets add to the overall security of funds, cryptocurrencies remain at risk of non-permanent losses when the value of the token falls beyond recovery. Hardware wallet providers have seen a sharp increase in sales as investors slowly move away from storing their assets on exchanges.

Don’t trust, check

In all crypto crashes this year – incl 3ACAnd the Terraform LabsAnd the CelsiusAnd the Voyager And the FTX Breaking investor confidence was a common and obvious theme. As a result, the slogan “Don’t trust, verify” is finally resonating with both new and seasoned investors.

Popular cryptocurrency exchanges, incl BitfinexAnd the binanceAnd the OKXAnd the ByteAnd the Huobi and Gate.io, have taken proactive methods to display proof of their reserves. Exchanges have introduced portfolio information that allows investors to self-check the presence of their funds on the exchange.

While the Proof of Reserve provides a snapshot of an exchange’s reserves, it fails to provide the full picture of its finances because information on liabilities is often not publicly available. On November 26, Kraken CEO Jesse Powell contacted him Binance Reserve Proof of “Either Ignorance or Willful Misrepresentation” Where the data did not include negative balances.

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but, Binance CEO Changpeng Zhao He refuted Powell’s claims by saying that the exchange has no negative balances and that will be verified in an upcoming audit.

The above three considerations are a good starting point for protecting your crypto assets from the bad guys. Some other popular methods are used to take control away from cryptocurrency entrepreneurs Decentralized Exchanges (DEX)And the self-custodial governors (non-custodial) and conducting extensive research (DYOR) on projects that appear investable.