Exchange risk
What happens to your holdings when the venue holding them fails or freezes withdrawals, even while prices look normal?
In plain words
Exchange risk is the chance that a trading venue itself fails: it becomes insolvent, is hacked, or simply stops letting customers withdraw funds. Because the exchange holds customers' assets in its own accounts, this risk sits between you and the market, and price data alone shows none of it.
Why it matters
Positions and balances recorded at a venue are claims on that venue, not on the underlying asset. A market can be orderly, liquid and calmly priced while those claims become uncertain. Traders often first learn of this risk when they try to move funds out.
In a real week: BTC, week of 1 June 2026
In the week of 1 June 2026 (Mon), BTC fell 14.04% from 73674.39 to 63332.01, with a range of 25.3% and dollar volume of 14.98bn, 1.75 times its prior 12-week average. Every one of those figures describes the market itself. None of them says whether a venue holding those positions could return funds on request; that risk is measured by reserves, custody arrangements and withdrawal operation, which no price series records.
A common mistake
Assuming a market's visible health, such as heavy volume or orderly pricing, also means the venue holding your assets is safe. The two are separate risks.