In the past days, BTC withdrawals from exchange wallets accelerated, giving rise to speculation about safety and the future intentions of the market.
The crypto community is noting a strange phenomenon – increased activity in Bitcoin (BTC) fund transfers from exchanges. Poloniex has seen a dramatic decline in the funds in one of its chief BTC wallets, with around 50% withdrawn since August.
Funds have been moved to other exchanges, as crypto social media noticed:
— Marshall Long (@OGBTC) October 2, 2018
The Poloniex wallet balance fell to around 4,900 BTC from 7,120 BTC as of September 21, with the potential to decrease further. In the past, Poloniex has seen active and sudden withdrawals, but this time, the transfer of funds coincides with increasing doubts about the Tether (USDT) cryptocurrency.
At the same time, the Bitfinex cold wallet has seen its balance sink from 212,000 BTC to around 152,000 BTC.
The speculation surrounding these developments is related to distrust in exchanges that hold significant amounts of USDT. However, Poloniex has a smaller USDT wallet, and its problem is also related to the transfer of control to Circle. The exchange is altering its model, delisting coins and also removing margin trading and lending products. It is possible that traders who relied on these products have been moving their funds.
I'm just glad that #Poloniex has no relevance anymore. A few years ago, those random delistings messed up the market regularly
— Stephan Lange (@Bicmac1973) October 3, 2018
The other reason is that traders are simply going to other exchanges as Poloniex continues to change its profile. The introduction of the USDC stablecoin may also alter Poloniex trading and see assets transferred to other exchanges due to stringent disclosure requirements and KYC procedures.
Poloniex has continued to spur user reports of coin loss, frozen accounts, and withdrawal problems. The exchange is also often seen in maintenance mode. Additionally, it shows relatively low volumes in the Bitcoin markets, indicating its declining relevance compared to newer exchanges. Expectations of further delistings also push traders away since assets are removed without a warning and often crash dramatically.