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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.

Singapore's state-owned investment firm Temasek revealed despite eight months of due diligence in 2021, it didn't find any significant red flags in FTXs financials before deciding to invest $275 million into the now-bankrupt crypto exchange.

Like many of FTX's more than one million creditors, the Singapore-based firm has been left blindsided by the collapse of FTX and the ongoing fallout, saying in a Nov. 17 post:

"The thesis for our investment in FTX was to invest in a leading digital asset exchange providing us with protocol agnostic and market neutral exposure to crypto markets with a fee income model and no trading or balance sheet risk."

Before the firm decided to invest $210 million for a stake of 1% in FTX International and $65 million for a minority 1.5% stake in its United States-based entity FTX US across two funding rounds, it claims to have conducted "extensive due diligence" from Feb. to Oct. 2021.

According to Temasek it reviewed FTX's audited financial statements, investigated the associated regulatory risk with crypto financial market service providers, and sought advice from external legal and cybersecurity specialists, with a legal and regulatory review undertaken for the investments.

Professional esports organization Team SoloMid (TSM) (previously TSM FTX) has suspended its $210 million sponsorship deal with the now-bankrupt FTX crypto exchange “effective immediately” following the cryptocurrency trading platform’s shock collapse last week.

The United-States-based esports organization made the announcement in a Nov. 16 tweet to its 2.2 million followers, adding that the decision was made after “monitoring the evolving situation and discussing internally.”

The $210 million deal was put to paper in Jun. 2021, which resulted in the renaming of TSM to TSM FTX. At the time of the deal, the esports organization said it would allocate its new resources to all corners of the globe by opening offices in Asia, Europe and South America, according to Esports insider.

TSM also purchased $1 million worth of FTX’s native token, FTT, which was distributed to players and employees. 

Following FTX's collapse last week, TSM in a Nov. 13 tweet said the firm was discussing its legal counsel “to decide the best next steps to protect our team, staff, fans and players.”

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.

The collapse of FTX cryptocurrency exchange has created a liquidity crisis in the crypto space, which could extend the crypto winter through the end of 2023, according to a research report by Coinbase.

According to analysts, the FTX implosion could keep the institutional investors at bay because they are even more likely to tread cautiously for some time.

The crisis has negatively impacted several crypto-focused companies who have assets stuck on FTX following the company's bankruptcy filing on Nov. 11. Investors also fear the contagion could spread, causing further damage to the cryptocurrency ecosystem.

Although several investors were rattled by the collapse of FTX, billionaire venture capitalist and serial blockchain investor Tim Draper remains bullish on Bitcoin (BTC). In a Nov.15 interview with Cointelegraph, Draper doubled down on his $250,000 target for Bitcoin in 2023.

However, investors should take the price projection with a pinch of salt because it is unlikely that Bitcoin will start a roaring bull market in the near future.

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.