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13,000 ETH Burned In A Few Days As FTX Collapse Causes Surge In On-Chain Transactions

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FTX collapse has an unexpected effect on Ethereum.

A surge in on-chain transactions has led to the burning of 13,000 ETH in just three days, according to data from Etherscan.

It comes as users rushed to take their assets off exchanges as rumors of FTX’s insolvency took hold. Former FTX CEO Sam Bankman-Fried, in a message to staff, indicated that the now-bankrupt crypto exchange processed over $6 billion in client withdrawals in just three days, according to a Reuters report. It is a severe jump from an average of about tens of millions daily. 

Ethereum hourly withdrawals on FTX reached a new all-time, according to crypto pundit Lark Davis’s tweet on Monday. Consequently, the increased burns due to increased on-chain transactions and Ethereum’s significantly reduced daily issuance post-Merge have ensured that the crypto asset has achieved deflationary status. 

The ETH supply chart shows that the token’s supply took a nosedive on Monday just after Binance’s Changpeng Zhao declared that the exchange was liquidating its FTT position triggering the FTX bank run. As a result, the annual issuance now sits at -0.032% after a steep drop in the last couple of days. Furthermore, data shows that Ethereum’s supply has dropped by 6,158 ETH post Merge.

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It is worth noting that Ethereum has held up better than Bitcoin in the wake of the FTX collapse. Compared to Ethereum, which did not even put in a new yearly low, Bitcoin tapped two-year price lows at $15,682.

As highlighted above, FTX and about 130 other subsidiaries and sister companies this week filed for chapter 11 bankruptcy after a bank run confirmed suspicions of shady financials. Notably, the once-second-largest crypto exchange in the world loaned a considerable amount of user funds to its sister company Alameda Research collateralized by its exchange token FTT, which is highly illiquid.

On Monday, SBF still gave users assurances that the exchange was fine. But, notably, things have taken a turn for the worse as it appears someone has hacked the crypto exchange and withdrawn over $300 million worth of assets. This further reduces the chances of users getting fair compensation for their holdings through bankruptcy proceedings.

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Ammara Mubin is a cryptocurrency reporter and trader with vast experience in the industry. Mubin has written several news stories related to the crypto industry, including non-fungible tokens (NFTs), decentralized finance (DeFi), fundraising, mining, etc. Her major focus is covering regulatory events that are capable of shaping the entire crypto ecosystem.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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