In the face soaring prices for Bitcoin and other digital currencies, several crypto exchanges are experiencing major net capital outflows as declarations of fraud and manipulation create market volatility for the young industry. Withdrawals from trading platforms including Bitfinex, BitMEX, Binance and Kraken keep exceeded inflows by roughly $622 million in the five-day period ended Wednesday, according to data from TokenAnalyst, a London-based blockchain scrutinization firm, per a detailed story in Bloomberg as outlined below.
Crypto Exchanges Seeing Major Net Capital Outflows
- Bitfinex
- BitMEX
- Binance
- Kraken
Fountain-head: Bloomberg
Bitcoin’s Share of Crypto World Increases
It may seem counterintuitive that funds are being pulled from crypto the boards just as Bitcoin has surged. The currency has risen about 100% this year and by over 55% in the last thirty days centre of upheaval in the broader stock market. Yet experts say it’s logical that investors spooked by turbulence and negative news in the crypto cosmos would favor what they view as the most secure asset in the group: Bitcoin.
That’s illustrated by Bitcoin’s succeeding market share as a percentage of the entire crypto universe. It has increased from 53% at the start of the year to 60%, corresponding to data provider CoinMarketCap.com.
“That Bitcoin, which is clearly the quality asset in the space, has outperformed in this just out rally is likely the result of it not only breaching the psychologically important $6,000 level, but also some significant institutional and/or ranking buying. These buyers would be expected to invest disproportionately in the most established and vetted asset — and that asset is apparently Bitcoin,” said Josh Gnaizda, chief executive officer of Crypto Fund Research, per
Tether Behind Bitcoin Volatility
According to Bloomberg, Bitcoin’s acid rise last week could have been amplified by capital flight from Bitfinex and Tether, which are attached.
“Since Tether is insufficiently backed, it means that some of the reserves backing customer assets on exchanges are tenable insufficient,” said John Griffin, a finance professor at University of Texas at Austin who has researched cryptocurrency market manipulation. “So poignant customers will not custody their funds on exchanges and pull their crypto off exchanges. This could put more distant upward pressure on Bitcoin prices as one would rather take fake money and exchange it to Bitcoin.”
Looking In the lead
While Bitcoin faces its own share of challenges as the largest coin in the crypto space, growing institutional interest in interchange the asset has helped bring Bitcoin into the mainstream and thus grant it more stability. Many bulls dream in light of Bitcoin’s recent surge, even amid negative headlines of fraud and manipulation, as signaling that the “crypto winter” is as surplus.