For centralized exchanges, the scar from the SEC coup has not healed. The Bitcoin balance on those platforms continues to drop.
Centralized exchanges or cryptocurrency trading platforms are not recovering from the blow they received from the SEC in June. The United States Securities and Exchange Commission (SEC) filed lawsuits against Binance and Coinbase in early June.
Meanwhile, regulators sued them for allegedly illegal trading in securities. Additionally, other lawsuits were filed against Binance. The agency considers many tokens as securities, which are traded on all exchanges apart from the defendants. The response of a large part of investors is to withdraw their funds from these platforms.
Centralized Exchanges Continue to Deflate
June saw a positive surprise regarding BlackRock’s application for a spot Bitcoin ETF. However, that was not enough to regain confidence in centralized exchanges. In this sense, according to data from Glassnode, the balance in BTC continues to plummet.
After the events of FTX and others in 2022, the crypto balance on exchanges suffered a decline. But from February to the end of May there was a notable recovery. By February 7 the balance in BTC was at 2,278 million BTC and at the beginning of May it reached 2,352 million and in June, before the lawsuit, it was at 3,331 million.
It was then that the descent began. Currently, the Bitcoin balance goes back to 2,248 million coins. This is a worrying point for these companies. To get an idea of this setback, it should be noted that it is the lowest since March 2018.
Such a setback occurs despite the fact that the price of Bitcoin managed to improve by approximately 80% in 2023. Withdrawals of coins from centralized exchanges cannot be interpreted in any other way than distrust on the part of users.
ETH Balance Also Crashes
By the beginning of the year, the balance of ETH on the CEX was approximately 20 million coins. Currently, the balance stands at just over 15 million tokens. As far as USDT is concerned, the amount of tokens has been in general decline since the beginning of the year. However, after the lawsuit experiences an increase in its balance.
With these data in perspective, it can be said that the situation of crypto trading platforms is little more than delicate. Everything will depend on the results of the trials that the two trading as mentioned earlier houses will face against the regulators. In the event of a defeat against the SEC, centralized exchanges could be deflated and a significant number of these companies would go bankrupt.
Investors are fully aware of this issue, which has also been expressed in the decline in Ether staking in CEXs. Investors in this token prefer decentralized protocols to avoid a kind of crash like FTX that causes the total loss of their funds. Some exchanges have so-called proof of reserves, but that is not enough to allay mistrust.
Whales’ Signs
During most of 2023, whales moved more coins onto exchanges, but now the trend seems to be changing. A total of 218,176 whale bitcoins moved in all directions last week. 54.06% left centralized exchanges for unknown or accumulation wallets.
According to specialized news portals, in a group of whale entities that have 1,000 BTC or more in their portfolios, the tendency to abandon the exchanges seems to be the same.
By Audy Castaneda
