FTX fallout prompted large new outflows from CEXes to personal wallets, a common consequence of market volatility.
This time, institutional money led the charge.
Institution-led movement of funds from CEXes to personal wallets & DeFi.
Overall, institutional funds have made up a bigger share of movements from CEXes to personal wallets over time. As shown in the chart below this is true for CEX-to-personal-wallet flows generally, and not just at times of elevated activity or volatile market conditions.
What do institutional investors do with the funds they move from CEXes to personal wallets?
Many of them are likely just holding the funds there, or transporting them to a new CEX. On-chain data also suggests many are using the funds to interact with DeFi protocols.
DeFi protocols have also historically seen surges in transaction volume in the same time periods of increased CEX-to-personal-wallet flows, suggesting a significant portion of those funds withdrawn to personal wallets are soon after used for DeFi transactions.
