March 12 is a day that most crypto traders wish to forget. On that particular day, BTC fell by 50% within hours. This steep correction led to the liquidation of billions in long contracts on BitMEX as the exchange suffered downtime on its servers. BitMEX later attributed this unprecedented downtime to DDoS attacks.
Nonetheless, the amount of bitcoin (BTC) held by the exchange has sunk dramatically in recent weeks. According to a recent report by CoinMetrics, BTC supply on BitMEX has fallen at least 22.5 percent in the days between March 13 and March 29.
In particular, BitMEX held 244,000 BTC as of March 29. In contrast, the exchange was holding 315,000 BTC on March 13. This is a decline of approximately 23% within a two-week period, Coin Metrics noted.
It’s hard to pin-point the exact catalyst for this freefall seen on BitMEX. Some believe BitMEX might have settled on limiting its exposure to BTC while others think investors are transferring their holdings to cold storages for safekeeping due to the overall gloominess in the global economy.
A few others believe investors have simply lost trust in BitMEX after the mass liquidations, hence they are withdrawing their funds from the exchange en masse.
However, Coin Metrics also stated that other big exchanges like Binance, Gemini and Poloniex also reported a decline in their BTC balances. The only exchanges that have witnessed an increase in their BTC supply over the last month are Kraken and Bitfinex. These two exchanges have each recorded a 1% growth.
Exchanges’ Tether (USDT) Balances Are Going Through The Roof
Notably, the March 12 sudden crash has seen one unlikely cryptocurrency emerge as a huge winner: Tether’s USDT.
Whilst bitcoin (BTC) has been leaving exchanges, the amount of USDT held in these exchanges has been rising. In fact, USDT’s balance on exchanges recently smashed a new high of approximately 1,282,118,378.835.
The CEO of derivatives exchange FTX, Sam Bankman-Fried, summarized three reasons why he thinks the demand for USDT has spiked over the past few weeks in a tweet on March 31.
First, he notes that there are increased over-the-counter flows mainly from Asia. Secondly, he cites that investors are selling BTC for USDT to hedge their positions. Finally, Sam observes that people are selling BTC to acquire USDT in order to reduce risks.
With the coronavirus pandemic slowly ravaging the world economy, the rapidly-growing USDT supply shows that investors are looking for an easier way to move money around with little price fluctuations as stablecoins like Tether have less price volatility.