The blockchain analytics company Glassnode stated in its "Week on-chain" report that the current market conditions and the bearishness of the last few weeks have "shaken the confidence of Bitcoin holders."
Glassnode notes this has been aggravated by the market's reaction to the FTX fallout.
It measured aggregate increases in the Mean Inflow Volume to exchanges to ascertain that more whales are suffering along with the rest of the market.
As a result, and according to their analysis, once a cycle bottom forms, the average deposit size grows in terms of the US dollar across all major exchanges.
This trend, Glassnode notes, has been in action since May, and bears show some similarities to the bear market cycle of 2018.
Glassnode, in their report, notes that after the FTX impact subsided, BTC, despite trading lower from the early-week high of $17,036 and ending up at the $16,248 zone (which is also one of the lowest closing prices of the cycle), has continued to consolidate.
The late 2018–19 bear market was marked by a widespread increase in the Mean Inflow Volume to exchanges, and the average deposit amount soared across all meaningful exchanges in USD terms as the market finally hit a cycle bottom.
Glassnode mentions this in most essential exchanges, including Binance, Bitfinex, Coinbase, Gemini, and Kraken.
Since the LUNA ecosystem collapsed in late May, the 2018 conditions are happening again because there has generally been a net growth in significant deposits during the past six months.
This suggests that trading companies, institutional investors, and whales have dominated exchange deposits.
The report also notes that the financial situation of whales in the wake of the current market conditions may be one of the leading forces behind this.
This is so because the whales are at an unrealized loss for the first time since March 2020, with spot prices currently at $16.2k. With an excess of between 5k and 7k BTC per day in net inflows over the past week, whales have been depositing coins to exchanges in response.
After the FTX debacle and as Bitcoin holders look for self-custody alternatives to centralized (and even decentralized) exchanges, withdrawals into investor wallets of practically all sizes have reached historic levels.
As a result, this week saw an all-time high for exchange outflows in the 30-day net position change of all exchange balances.
The analytics platform notes that Bitcoin is leaving exchanges at a rate of -172.7k BTC per month. This figure, Glassnode notes, surpasses the previous high established after the sell-off in June 2022.
The total number of confirmed transactions has also increased during the last two weeks, according to Glassnode, reaching a multi-month high of 246k secured transactions daily.
In addition, 77.1k withdrawals, or about 29.2% of the total, were related exchange withdrawal transfers; exchange deposit transfers accounted for 18.2% of the total (48.1k deposits).
Exchange deposit and withdrawal operations currently make up 47.4% of the total, which is a record high for the year thanks to this spike in exchange-related activity. In the past, bull markets (consistent trends) and high volatility sell-off events have been associated with exchange dominance (short-term spikes).
This year, the price of bitcoin has fallen to its lowest point in two years. On 22 November, Bitcoin hit a low of $15,665 and is now trading at about $16,501 at the time of writing.
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