Exchange Outflow All-Time High And Celsius Collateral Update
June was the largest outflow month for bitcoin leaving exchanges. Celsius pays down Maker loan freeing up $460 million in collateral before sending it to an FTX address.
Largest Exchange Outflow Month All-Time
As fears of contagion and counterparty risk have gripped the bitcoin/crypto space, June quietly was the largest month of net withdrawals in recorded history for bitcoin, with a peak 30-day net change of 152,446 BTC leaving exchanges during the 30 days that proceeded June 26. The end-of-month total for June was smaller, but still extremely noteworthy at 123,652 BTC departing exchanges on a net basis over the month.
While these monthly outflows were a record in bitcoin terms, in dollar terms it was not, with April and September 2021 along with April of 2022 boasting larger amounts of net outflows in dollar terms. While it is insightful to denote figures in both dollar and bitcoin terms, we prefer to use bitcoin terms to keep measurement consistent across time periods.
Shown below is the aggregate amount of bitcoin held across exchanges (Binance, Bitfinex, Bithumb, BitMEX, Bitstamp, Bittrex, Coinbase, Coincheck, Crypto.com, FTX, Gate.io, Gemini, HitBTC, Huobi, Kraken, KuCoin, Luno, OKEx, Poloniex).
The total amount of bitcoin across these exchanges at the time of writing is 2,400,178 BTC, equating to $49.35 billion and approximately 12.58% of circulating supply.
Notably, the all-time high for the amount of bitcoin on exchanges was March 14, as the market cascaded briefly below $4,000.
As bitcoin has flowed out of exchanges over the last month, most of the outflows look to have ended up with longer-term investors. Illiquid supply estimates of the network increased over 1% during the last 30 days and roughly 172,000 bitcoin were added to illiquid supply since June 14.
Although exchange balances don’t necessarily correlate directly with the exchange rate, it can be insightful to monitor ongoing trends, specifically when the trend greatly shifts, with March 2020 serving as a great example.
Similarly, it can be insightful to look at which exchanges are gaining market share relative to others, especially amid all of the contagion and fear of interconnectedness in the crypto industry.
Thus, it is quite noteworthy that the balance of bitcoin on Binance continues to trend upwards, just below its highest level ever at 614,589 BTC, gaining a vast amount of market share as coins flow off exchanges in aggregate. We believe this has to do with the tremendous amount of hedging that occurs in the derivatives market as bitcoin hovers above $20,000, as aggregate open interest on Binance continues to soar.
With the move, Binance has surpassed Coinbase as the largest exchange balance bitcoin holder, with 25.61% of all bitcoin across exchanges currently held on the platform. Given the platform’s suite of derivative offerings, it is no surprise that it has gained market share relative to spot-only exchanges such as Coinbase, where users can only buy or sell in the spot market.
Final Note on Exchange Balances
It will be interesting to see if the trend of decreasing exchange balances accelerates given the vast amount of counterparty risk that the crypto industry was exposed to over recent months.
Celsius Pays Down Maker Loan
The Celsius story continues with news coming out today that the company has completely paid down their Maker loan, which has freed up their customers’ 21,962 Wrapped Bitcoin collateral, worth approximately $460 million. It’s still unclear what the plans are for these assets or where the funds came from that allowed Celsius to pay off the loan. Right after the loan was paid off and collateral released, Celsius looks to have sent 24,462 Wrapped Bitcoin worth over $500 million to an FTX address.
Regardless of what’s being done with the Wrapped Bitcoin, it’s likely in Celsius’s best interest to have as much liquid capital as possible right now which could be used to pay off or extend external, off-chain debt obligations if needed. What we know of Celsius total assets is from community sourced wallet addresses on their holdings. They currently have $1.57 billion in total crypto assets including $258 million in on-chain debt. It’s still a bleak outlook that depositors will see any of their assets returned as Celsius heads towards a likely bankruptcy.
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