The collapse of the crypto exchange FTX has accelerated BTC’s bearish trend since June 2022. The first cryptocurrency has faced intense pressure from sellers. At the time of writing, the weekly price decline is 4.8%, and the capitalization of “digital gold” reaches $310.6 billion.
Why Are the Hodlers Getting Nervous?
Before the fall of the Sam Bankman-Fried exchange, long-term investors were much more confident in their decisions, but now they are going through a period of severe financial stress. According to Glassnode, the unrealized loss rate is -33%. It compares to the lows of the previous bearish trend in 2018, when the maximum level of unrealized losses from rate differentials was -36%.
The last time hodlers were in this position, and the BTC price reached a pivot point. It means that BTC will soon hit bottom. But renowned crypto critic and gold supporter Peter Schiff believes that the big share of sales is yet to come. He recalled his June 2022 prediction. At that time, Schiff said that the need to sell BTC would increase when the recession deepened and many hodlers lost their jobs. In that case, people will have to sell cryptocurrency to pay their bills.
BTC Investors Opt For Self-sufficiency
The fall of FTX forced investors in “digital gold” to withdraw assets from exchanges and choose self-custody (placing coins on third-party wallets). And the withdrawal of BTC occurred at a historic rate.
According to Glassnode, the net decrease of total BTC balance on exchanges fell by 172,700 BTC in 30 days. It is one of the most significant numbers, which can only be matched by three periods: April 2020, November 2020, and June-July 2022.
As a result, the market was in an interesting position when BTC began to be withdrawn massively from trading platforms. At the same time, other assets (such as centralized stablecoins) continued to appear on exchanges.
This signal is intriguing because it can be seen as a definite sign of confidence in collateralized assets and an argument in favor of developing a trend toward self-sufficiency.