Kraken Crypto Exchange in Trouble? Some Analysts Suspect So
According to CryptoQuant, there has been the largest BTC and ETH Outflows Since 2017.
Kraken, a leading crypto exchange based in the United States, has grown in popularity and user base over the years, marking its presence with physical locations all over the world. Kraken is known for ranking #4 in trading volume for several years. Kraken is recognized as one of the top five exchanges in terms of user base and reputation.
Since the painful crash of FTX and the admission of criminal behavior by Binance, the market has become more vigilant with regard to CEXs. Now Kraken is showing some symptoms and the whole community is getting alarmed. It is important to note that BTC and ETH withdrawals from all exchanges are common.
So the news does not mean that this particular exchange is on the brink of collapse. It is not FUD against this or other exchanges. At most, based on data from platforms that specialize in studying the financial health of crypto companies, it is purely informational.
However, it highlights how Bitcoin and Ethereum’s outflows from this platform exceed those of its competitors. The amount of insider holdings of these two coins on the US CEX has returned to 2016 and 2018 levels, according to the CryptoQuant portal.
In this regard, the platform would have a total of ₿122,000 bitcoins in its reserves. As for Ethereum, the amount has fallen below 1 million coins and will be the lowest point since 2016, according to the website. As noted above, this situation should not be interpreted as an alarm signal, and an explanation is attempted below.
CryptoQuant explains this by posting on X as follows:
“Kraken’s Bitcoin reserves have dropped to the same level as in 2018, now holding 122,300 BTC. For Ethereum, this is the first time Kraken’s reserves have fallen below 1 million units, a level not seen since early 2016.” – By @joao_wedson
Kraken, One of the Leading Crypto-Exchanges in the Global Market
The Kraken crypto exchange’s low share count should not be taken as a red flag. Coin outflows from this and other CEXs could be motivated by a number of factors. The hype around spot ETFs on the stock market plays a significant role.
Basically, a lot of people are buying BTCs for portfolio diversification as a result of the rise in interest. Thus, these coins leave exchanges in large quantities for more reliable custody portfolios. Consequently, some analysts warn of a potential supply crisis if investors continue to drain CEX of coins.
The SEC’s two-step approval of Ethereum ETFs is already having an effect. The problems with ETH supply on the exchanges, which were already having a hard time with staking, are now even more pronounced.
Either way, major exchanges face a challenge that may be closer than feared. From this point of view, it can be said that users should not only worry about the Kraken crypto exchange, but about all of these platforms. The recommendation is to look for cold wallets and self-custody for people who feel insecure about their capital in these companies.
By Audy Castaneda