On the 13th of March Bitcoin had one of the most gut wrenching declines in its history. Prices falling from 8000$ to just under 4000$. Prices have since made a recovery but on first reflection we still see that the event has caused some aftershocks.

One such aftershock is the decline in active Bitcoin deposits on a number of top exchanges. Via data provided by TokenAnalyst we can look at Binance‘s active deposits. Here we see that since the crash actives deposits have fallen 7% from 261,000BTC to 244,000BTC.

Active Deposits on Binance

However it is important to note that this just brings deposits back to levels seen at the start of the year.

We see a similar trend on Huobi with deposits falling 6.5% from 390,000 to 365,000BTC

Active Deposits on Huobi

BitMEX which is typically by volume the largest derivatives exchange in crypto, was by far the most effected. With deposits falling over 24% from 316,000BTC to 240,000BTC.

Active Deposits on BitMEX

But what is the explanation for these large movements in capital? Well its impossible to say for certain what has caused these large outflows however we can speculate on certain theories.

One rather simplistic but probable theory is that its simply the everyday movement of Bitcoin. With no collective ulterior motive. This is at least partially true. Both institutional and retail traders are constantly moving Bitcoin with no seeming economic motive.

Many have pointed out that correlation between Bitcoin and the S&P500 has been high since the crash. With the S&P500 having some of its worst days in history around the time of Bitcoins crash. Accompanying this were global macroeconomic concerns. These in combination may be causing people to withdraw their Bitcoin from exchanges in favor of less speculative assets or assets which are more liquid. This is also probable explanation.

S&P500 Chart

What these don’t explain however is why BitMEX’s deposits were so much more effected than the other mentioned exchanges. This may be due to growing concerns surrounding BitMEX.

One such concern is an unconfirmed rumor that BitMEX will be enforcing more stringent KYC measures which many cryptocurrency traders are naturally averse to.

Another is the loss of faith in BitMEX as a platform. At the bottom of crash when price kept falling with no bottom in site BitMEX went offline for 15 minutes. When it returned price sharply increased. Many traders called shenanigans after the event but BitMEX responded by simply saying they were DDoSed.

Sam Bankman-Fried CEO of another large exchange FTX and quantitative trading firm Alameda Research went as far as to say that BitMEX had to go offline to prevent Bitcoin going to zero on the platform.

When looking at the data no exchange seems to have absorbed any of the withdrawn Bitcoin from BitMEX so it will be interesting to see how the crypto exchange landscape develops over the next few months.