Trust wallet tokens, Atomic wallet coins, Block wallet tokens, and math wallet tokens, amongst others, averaged over 22% ROI last week. At press time, the trading volume of these non-custodial wallet tokens surged 4 times, with their market cap rallying over 50%.
Non-custodial wallet tokens
Non-custodial wallet tokens are the native tokens of non-custody wallets. These wallets give users full control over their private keys and the sole responsibility for protecting their holdings. On the other hand, custody wallets, used by centralized exchanges like Binance, FTX and crypto.com own private keys of crypto deposited on their platforms. By holding the keys they have the authority to utilise the funds at will.
So, why are these tokens rallying? To understand why it is first important to explore the happenings of the crypto market in the last two weeks.
Crypto market outlook
The implosion of Alameda research and FTX group has been a trending topic among crypto circles for the last two weeks. The two-week fiasco ended with FTX, once the third-largest exchange by trading volume filing for bankruptcy protection in the United States.
The news shook the entire crypto industry, resulting in a ripple effect of a dominant bear market. The native token of the exchange FTT, for instance, fell over 99% from its monthly high of $26.47, while the cryptocurrency market cap fell below $1T.
Sam Bankman Fried (SBF), the former CEO at FTX, admitted to misappropriation and overleveraging of client funds without consent. The shocking news resulted in mass withdrawals from the platform as fearful investors made a run for their money.
Turns out Larry David was right.
The situation led to negative investor confidence in cryptocurrency exchanges and was echoed by other exchanges who in response frantically published their reserves assuring their customers of the safety of their funds.
Changpeng Zhao (CZ), Binance CEO, took the issue personally advocating for more transparency through exchanges on how they store user funds. He also advised that exchanges should avoid using their native tokens as reserves or for evaluating their worth.
On 14th November, CZ advocated for a recovery fund to help crypto companies in a liquidity crunch/ crisis. Justin Sun, the founder of Tron protocol, also offered support for the troubled platform.
Mark Cuban, a business mogul, shared a different opinion exempting crypto from the blame. According to the mogul, decentralized finance is not to blame. However, centralized entities should carry all the blame. The crypto implosion and bankruptcy will surely reshape the crypto industry.
Rising withdrawals from exchanges
While exchanges are scrambling to assure their users of their reserves, on-chain stats tell a different narrative.
According to Glassnode, a platform that offers on-chain analysis and financial metrics, Bitcoin withdrawals from exchanges are at a historical high averaging $106k BTC per month. The funds are being moved to non-custody wallets which are now registering higher volumes across the board.
The echos of the FTX collapse will likely act to reshape the industry across many sectors, and shift the dominance, and preference for trustless vs centrally issued assets.Glassnode finance on twitter
Investor interest is shifting to decentralized platforms and non-custody wallets.
Rallying wallet tokens prices
Wallet tokens have had a rally in prices signalling investor confidence. Block Wallet token for instance is already up 97% in 24 hours, with Atomic wallet rallying close at 54%. Trust wallet token (TWT), is up 110% this week.
The tokens seemed to absorb the shock of the bear market.
Users who hold these tokens enjoy perks from their wallets. These include discounted fees, DAO participation, airdrops, and passive rewards.
The future of WEB 3 will be more decentralized as investor preference for absolute control of their funds rise.