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Bitcoin (BTC) inflows to largest exchange Binance just saw a giant spike reminiscent of the 2018 bear market capitulation.

Data from on-chain analytics platform CryptoQuant shows that on Nov. 18, a giant tranche of almost 60,000 BTC entered Binance’s wallet.

Exchange inflows highest since late 2018

BTC price contagion fears thanks to FTX insolvencies and related panic selling are ongoing.

Now, the latest on-chain figures from Binance could provide an additional catalyst for nervous markets — the exchange has seen its biggest daily inflow on record.

With Nov. 18 not over, partial data from CryptoQuant puts current inflows at over 138,000 BTC for the day so far.

Before we get into the nitty-gritty of how one simple rule created the kind of insane return on investment noted in the headline — during one of the worst Crypto Winters in recent history — let’s be clear on one thing.

You can’t copy this now.

But anyone with access to Cointelegraph Markets Pro in 2022 could have. This is not a mere backtested strategy. It’s a real-life strategy — although you’re about to see historical results. 

This is no longer a thought experiment or proof-of-concept; it is an actual way to make money in crypto trading. 

For our purposes, it’s also a perfect way to illustrate how a simple strategy can work for real traders in real life — even during extreme market pullbacks. 

The Chicago Mercantile Exchange (CME) Bitcoin (BTC) futures have been trading below Bitcoin’s spot price on regular exchanges since Nov. 9, a situation that is technically referred to as backwardation. While it does point to a bearish market structure, there are multiple factors that can cause momentary distortions.

Typically, these CME fixed-month contracts trade at a slight premium, indicating that sellers are requesting more money to withhold settlement for longer. As a result, futures should trade at a 0.5% to 2% premium in healthy markets, a situation known as contango.

However, a prominent futures contract seller will cause a momentary distortion in the futures premium. Unlike perpetual contracts, these fixed-calendar futures do not have a funding rate, so their price may vastly differ from spot exchanges.

Aggressive sellers caused a 5% discount on BTC futures

Whenever there's aggressive activity from shorts (sellers), the two-month futures contract will trade at a 2% or higher discount.

Notice how 1-month CME futures had been trading near the fair value, either presenting a 0.5% discount or 0.5% premium versus spot exchanges. However, during the Nov. 9 Bitcoin price crash, aggressive futures contracts sellers caused the CME futures to trade 5% below the regular market price.

Bitcoin (BTC) ranged around $16,500 on Nov. 17 as markets digested the latest events surrounding exchange FTX.

FTX CEO tells of “complete failure of corporate controls”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD seeing only mild volatility at the Wall Street open.

The pair showed acclimatization to events around the FTX insolvency, the latest including revelations that Alameda Research had been immune from liquidation while trading on the platform.

After the departure of Sam Bankman-Fried, new CEO John Ray III wasted no time in acknowledging the extent of the problems left in his wake.

In a filing with the U.S. Bankruptcy Court for the District of Delaware, Ray describes the corporate control of FTX as a “complete failure.” He wrote:

The "Bitcoin-is-dead" gang is back and at it again. The fall of the FTX cryptocurrency exchange has resurrected these infamous critics that are once again blaming a robbery on the money that was stolen, and not the robber.

"We need regulation! Why did the government allow this to happen?" they scream.  

For instance, Chetan Bhagat, a renowned author from India, wrote a detailed "crypto" obituary, comparing the cryptocurrency sector to communism that promised decentralization but ended up with authoritarianism.

Perhaps unsurprisingly, his column conveniently used a melting Bitcoin (BTC) logo as its featured image.

Bhagat should have picked a more accurate image for his op-ed (melting FTX (FTT) Token?), particularly after looking at Bitcoin's decade-plus history that has seen it surviving even nationwide bans. This includes 465 466 obituaries since its debut in 2009 when it traded for a few cents.

Bitcoin (BTC) has flooded out of exchanges in the past week as users become wary of security and regulatory scrutiny.

Data from on-chain monitoring resource Coinglass shows United States exchanges in particular seeing heavy BTC balance reductions.

U.S. exchanges lead BTC exodus

In the wake of the FTX scandal, efforts to draw attention to the risk involved in custodial BTC storage stepped up on social media.

Users appeared to heed the warning, withdrawing over $3 billion in cryptocurrency in the week immediately following the solvency debacle and ordering record numbers of hardware wallets.

The aftermath of FTX is only just beginning, meanwhile, and as regulators plan investigative action and more attention to crypto as a whole, investors angst continues to grow.

A week after the fallout from the FTX and Alameda chaos some on-chain data points are interesting to observe. Although record amounts of Bitcoin (BTC) and Ethereum (ETH) volume are leaving the exchanges, not all decentralized applications (DApps) and protocols have shown growth, mainly due to reliance on FTX and Alameda. 

DeFi earnings highlight positive revenue for some protocols

According to Token Terminal’s earnings leaderboard, in the last 7-days, three protocols had revenue above $1 million. Ethereum led the on-chain earnings with over $8.5 million total, a sign of strong post-Merge fundamentals.

OpenSea was a distant second place to Ethereum, earning $1.5 million, while nine protocols and DeFi platforms earned more than $100,000.

Decentralized perpetual exchanges see increased trading volume

Combined with the migration away from centralized exchanges, the volatile crypto market has users trading in record numbers.

According to data from Token Terminal, the daily trading volume of perpetual exchanges reached $5 billion which is the highest daily trading volume since the UST meltdown in May 2022.

Ether (ETH) has been stuck between $1,170 to $1,350 from Nov. 10 to Nov. 15, which represents a relatively tight 15% range. During this time, investors are continuing to digest the negative impact of the Nov. 11 Chapter 11 bankruptcy filing of FTX exchange. 

Meanwhile, Ether’s total market volume was 57% higher than the previous week, at $4.04 billion per day. This data is even more relevant considering the collapse of Alameda Research, the arbitrage and market-making firm controlled by FTX's founder Sam Bankman-Fried.

On a monthly basis, Ether's current $1,250 level presents a modest 4.4% decline, so traders can hardly blame FTX and Alameda Research for the 74% fall from the $4,811 all-time high reached in November 2021.

While contagion risks have caused investors to drain centralized exchanges wallets, the movement led to an uptick in decentralized exchanges (DEX) activity. Uniswap, 1inch Network, and SushiSwap saw a 22% increase in the number of active addresses since Nov. 8.

Let's take a look at derivatives metrics to better understand how professional traders are positioned in the current market conditions.

Bitcoin (BTC) fell to intraday lows after the Nov. 16 Wall Street open as the FTX scandal appeared to claim another victim.

Genesis Trading liquidity “exceeded”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD trading around $16,400 at the time of writing.

Downside had entered again for the pair amid news that Genesis Global Capital, the crypto lending arm of Genesis Trading, had paused withdrawals over liquidity problems.

In a series of tweets on the day, Digital Currency Group (DCG), the parent company that counts Genesis Trading among its subsidiaries, directly attributed the decision to the FTX debacle.

“Today Genesis Global Capital, Genesis Trading’s lending business, made the difficult decision to temporarily suspend redemptions and new loan originations,” part of the thread stated.

If FTX is sparking new Bitcoin (BTC) bear market lows, BTC price action has further to fall to match Mt. Gox.

Data from on-chain analytics firm Glassnode confirms that the “Mt. Gox bear market” almost a decade ago still beats the 2022 lows.

FTX vs. Mt. Gox: Same, same but different

With the fallout from the FTX bankruptcy scandal still unfolding, questions remain over how many major crypto entities will be affected and how big industry losses will be.

BTC/USD fell over 25% last week as the ramifications became known and has failed to recover much lost ground.

At the same time, multiple comparisons to Mt. Gox have emerged: alleged mismanagement, poor security and insider trading activity have all been cited as examples.

Bitcoin (BTC) miners may be sending more BTC to exchanges this month — but overall, their sales have crashed since 2020.

Data from on-chain analytics platform CryptoQuant confirms that daily miner transfers to exchanges have decreased by two-thirds or more.

Miners cool BTC exchange sales after FTX spike

After BTC/USD lost 25% in days last week, existing concerns over miner solvency have heightened.

Given their cost basis and rising hash rate, commentators warned that many mining participants may not be able to make ends meet — block subsidies and fees would not be enough to cancel out expenses, chiefly electricity.

Network fundamentals, however, tell a curious story — hash rate continues to circle all-time highs and not fall significantly, indicating that at least certain miners are maintaining network hashing power, not shutting down operations en masse.

Solana (SOL) has lost 60% of its market value in a week due to its exposure to the now-defunct crypto exchange FTX, which could continue to haunt the "Ethereum killer" well into the future.

FTX/Alameda exposure hurting Solana price

FTX and its sister-firm Alameda Research is liable to have control over 50 million SOL, according to Solana's statement released on Nov. 10.

The FTX entities received 4 million SOL from the Solana Foundation on Aug. 31, 2020. They also started receiving a portion of 12 million SOL from Sep. 11, 2020, and nearly 34.52 million SOL from Jan. 7, 2021, through a "linear monthly unlock" mechanism.

Furthermore, the FTX entities started receiving portions of a 7.5 million SOL reserve from Solana Labs on Feb. 17, 2021. Notably, a transaction worth 62,000 SOL between the same entities stands unsettled.

Most SOL tokens promised to FTX/Alameda are vested, meaning the firm does not yet have them in custody but is liable to receive them through the linear monthly unlock mechanism. The last of these unlocks will occur by January 2028.

Bitcoin (BTC) spiked to $17,000 at the Nov. 15 Wall Street open as fresh United States economic data continued to show inflation cooling.

“Good” PPI boosts risk assets

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it came closer to multi-day highs.

Volatility had returned an hour before the open as the U.S. Producer Price Index (PPI) came in below expectations.

Core PPI was unchanged month-on-month, with the PPI overall up 0.2% versus the 0.4% forecast. Year-on-year PPI was 8% versus the 8.3% forecast.

The data, already in stark contrast to last month’s PPI, follows on from October’s Consumer Price Index (CPI) readout last week, this also showing that price increases in the U.S. were slowing.

Trust Wallet Token (TWT) has surged by nearly 150% in the last six days, bucking the downturn in the cryptocurrency market, whose net capitalization has crashed by almost $100 billion in the same period.

TWT whale accumulation picks up momentum

TWT’s price reached an intraday high of $2.43 on Nov. 15, a day after establishing a record high at nearly $2.75. At its lowest in 2022, the token was changing hands for $0.40, which makes it one of the year’s best-performing assets, with over 225% year-to-date gains.

The Trust Wallet Token’s uptrend picked up momentum in November following the collapse of Sam Bankman-Fried’s FTX, prompting a bank run situation wherein traders withdrew their funds from exchanges en masse.

For instance, the total number of Bitcoin (BTC) in FTX’s wallets dropped to zero in the week ending Nov. 13. Similarly, the exchange’s Ether (ETH) reserves fell from 611,000 to just 2,800 in the same period.

Distrust in centralized exchanges seems to have boosted the appetite for self-custody wallets. Binance CEO Changpeng Zhao’s endorsement of the token’s parent platform, Trust Wallet, has also played a major part in driving up the TWT price. 

Bitcoin (BTC) sellers are nursing their largest overall losses since March 2020, one on-chain metric suggests.

Data from on-chain analytics firm Glassnode confirms that Bitcoin’s spent output profit ratio (SOPR) has now fallen to two-year lows.

BTC on-chain losses mount

As Bitcoin holders attempt to pull funds from exchanges into noncustodial wallets, those moving coins around are doing so at multi-year high losses.

SOPR divides the realized value of coins in a spent output by their value at creation. In other words, as Glassnode summarizes, “price sold / price paid.”

As Cointelegraph reported, SOPR fluctuates around 1 and tends to be below that level during Bitcoin bear markets and above it in bull markets.

On-chain data from Glassnode show Bitcoin’s (BTC) movements hit a new record for the largest net decline in aggregate BTC balances on exchanges, reducing by 72,900 BTC in one week. 

A similar movement occurred in April 2020, November 2020 and June 2022, with the current outflow leaving around 2.25 million BTC on exchanges.

Exchange exodus for Ether, but not stablecoins

While Ether (ETH) did not see an all-time high outflow from exchanges, 1.1 million ETH was withdrawn from exchanges over the last week. According to Glassnode, this marks the largest 30-day exchange balance decline since September 2020 during the decentralized finance (DeFi) summer in the same year.

Related: Exchange outflows hit historic highs as Bitcoin investors self-custody

Contrary to Bitcoin’s and Ether’s declining balances on exchanges, stablecoin balances remain net positive on exchanges, meaning their balances are growing. Over $1.04 billion in Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and Dai (DAI) moved to exchanges on Nov. 10. This marks Nov. 10 as the seventh-largest stablecoin inflow to exchanges.

Bitcoin (BTC) lost 25.4% in 48 hours, bottoming at $15,590 on Nov. 9 as investors rushed to exit positions after the second-largest cryptocurrency exchange, FTX, halted withdrawals. More importantly, the sub-$17,000 levels were last seen almost two years prior, and the fear of contagion became evident.

The move liquidated $285 million worth of leverage long (bull) positions, leading some traders to predict a potential downside of $13,800.

As described by independent market analyst Jaydee_757, the bearish trend continues to exert its pressure, with $17,200 as a resistance level. Still, such an analysis provides no guarantee that the ultimate $13,800 bottom will be hit.

Curiously, the price action coincided with improving conditions for global equity markets on Oct. 4, as the S&P 500 index gained 6.4% between Nov. 10 and Nov. 11 and the tech-heavy Nasdaq Composite rallied 9.5%. Hence, at least from a technical perspective, Bitcoin completely decoupled from traditional finance.

Additional uncertainty on Bitcoin has been brought on by Grayscale Bitcoin Trust shares trading on over-the-counter stock markets after the $11.4 billion fund discount to its assets surpassed 40%.

Post Ethereum merge, layer-2 blockchains have been catching the eyes of users and investors alike. Research firm Delphi Digital has been tracking Arbitrum since August and recently shared its analysis in a monthly market report.

According to data, user behavior and historical analysis show multiple trends of rapid growth in transactions, total value locked and daily active users at Arbitrum-based platforms. 

Arbitrum reaches the top 10 in monthly earnings

When projects give away more token incentives than the revenue they incur, they have negative earnings. Token incentives that are higher than the fees a protocol receives are typically a sign that the growth is not sustainable and is, more than likely, wash trading.

Over the last 30 days, Arbitrum has earned $1 million in fees, a 134.41% increase. The increase in fees also increased the 30-day revenue for the Arbitrum protocol by 46.91%. Such growth puts Arbitrum as No. 8 among all decentralized finance (DeFi) protocols, with $240,000 in earnings.

User growth hits 70,000 daily active users as Optimism investors move to Arbitrum

In order for a protocol to receive revenue and earnings, it needs daily active users. Daily active users transacting and interacting with Arbitrum is how fees increase. Over the past 30 days, Arbitrum has witnessed user growth double to more than 70,000, but more recently, user count is back to under 30,000.

Bitcoin (BTC) returned to $16,500 at the Nov. 14 Wall Street open as bulls tried and failed to break higher.

Snowden hints BTC price echoes March 2020

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD ranging below $17,000 on the day after a dismal weekly close.

The largest cryptocurrency had failed to show convincing signs of recovery after losing more than 25% the week prior thanks to the debacle around exchange FTX.

That debacle was ongoing at the time of writing, with revelations fanning out to include other firms with significant exposure to the defunct exchange.

With little light at the end of the tunnel visible, BTC price action remained unsurprisingly weak.