Be careful, there’s rough times for exchanges. Bitstamp lost 19% of reserves in the past month, CoinW lost 29% and Bitmex lost 9%. The Cefi crypto liquidity crunch is beginning to take it’s toll.

I was doing my due diligence for exchange when I came across something shocking. Defillama offers data on something they call CEX transparency which tracks the total reserves of exchanges as well as the 24hr, 7D and 1M flows of funds into or out of exchanges.

Most of here should already know that crypto trading is drying up both as there is less interest in the sector as well as many traders simply buying and moving assets off the exchange to cold storage. Since around August, around 2 Billion in BTC has been removed from exchanges. This number rises to over 6 Billion since mid-2023.

This all obviously means that crypto trading fee revenues take an extreme hit. And not just this, but any exchange that are not fully backed by real non-manipulated tokens will crumble. I'm not saying that any exchange I mention is doing so, just pointing out the phenomenon.

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But to my main point, Defillama shows that Bitstamp has lost 19% of reserves and Bitmex has lost 9% of reserves. Interestingly, two of these exchanges are pretty old as far as exchanges go and have a decent name as far as crypto exchanges go. So of any random crypto exchange, these exchange have a higher chance of surviving if only based on their reputation. But that does not mean they are immune. You may simply experience less severe issues as lack of customer service or bugs and issues trading on the platforms as they downsize their staff.

There's also CoinW who lost a third of their reserves:

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I can't say I know must about them but with almost 10 Million on reserves, there are a bunch of people with money here.

And far from these exchanges, the crypto Cefi crunch will surely affect more that these two so be aware in general.

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14 thoughts on “Be careful, there’s rough times for exchanges. Bitstamp lost 19% of reserves in the past month, CoinW lost 29% and Bitmex lost 9%. The Cefi crypto liquidity crunch is beginning to take it’s toll.”

  1. Proof of Reserves pros & cons with related info are in the collapsed comments below.

  2. If the exchange is just holding assets on behalf of their customers then those figures are irrelevant.

  3. Interesting! For a mental exercise, what would happen if everyone just bought and held after moving everything to cold storage? The idea of exchanges and markets is that people buy and sell, they go long and short, etc.

  7. Self custody has a twofold benefit.

    One, you hold your own coins which means CEX operations won’t effect you. And two, if people keep their coins off exchanges, the liquidity crunch would keep prices higher.

  10. As the value appreciates, network effect, more people more wallets, it follows that less and less crypto itself (fewer coins) will be held by exchanges, just cause it reflects the escalating value as the supply gets diluted, even if it’s not reflected in an escalating price (yet) 😀

    EDIT: also, if the only crypto you own is held by cex’s, you not really USING it, so technically its an indication of people using it for what it is, cryptocurrency, rather than a entry in an exchange’s database.

  12. Trade DEX. It’s simple af and if you find an aggregator that dips into multiple DEX liquidity pools, you’ll get the best price guaranteed on all your trades. Ffs, you can even benefit from positive slippage (!) and get MORE crypto than you are quoted. zcx dot com are the best I’ve found – give it a whirl!

  13. Does everyone assume exchanges have no interest in holding 1:1 reserves?

    It seems extra risk at the moment as if price goes up exchanges are buying back customer IOUs at much higher prices

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