Bitcoin (BTC) withdrawal patterns on centralized exchanges have changed significantly over the past five years.
CryptoSlate’s analysis of Glassnode data on BTC’s average withdrawal price on top exchanges like Coinbase, Gemini, Binance, FTX and Bitfinex reveals an interesting pattern.
The chart above shows that in the early days of cryptocurrency adoption, especially in 2017 when Binance was founded, exchanges poured most of the stupid money into cryptocurrencies.
according to investedia, dumb money refers to retail investors who buy primarily because of market hype and fear of missing out. Investors in this group typically tend to buy when prices are high or near peaks.
Because they buy near the peak, they will sell or exit when the value of the asset declines. This was evident in the early days of Binance, when most of the withdrawals on the platform occurred after Bitcoin peaked.
This suggests that most users are not withdrawing with maximum profit, if not at a loss. Therefore, the realized outflow price will exceed the current.
However, the emergence of new exchanges such as FTX and Gemini has seen the “silly money investors” move away from Binance. These exchanges have had very high average withdrawal prices since their opening in 2019.
For reference, average withdrawal prices for Gemini and FTX hit all-time highs during the Terra LUNA market implosion. Also, the recent collapse of his FTX has caused retail traders to withdraw large amounts of assets from failed exchanges.
By comparison, Bitfinex’s average withdrawal price has remained low and stable since 2017.
investedia I will explain Smart money investors are institutional and knowledgeable investors who understand the market better and use this to make informed decisions. This class of investor has the tools and expatriates to make better investment decisions.
Bitfinex, on the other hand, is the only one with a Bitcoin outflow realized price below the average of all exchanges.