The cryptocurrency market is seeing a significant shift in trading patterns, with the amount of Bitcoin on exchanges reaching its lowest ratio since December 2017, a five-and-a-half-year low that shows traders are becoming more interested in self-custody.
A reduced supply of the flagship cryptocurrency on trading platforms reduces the quantity of Bitcoin that might be sold back on the market, therefore limiting available supply and making it easier for BTC’s price to rise if demand increases.
Bitcoin, in particular, has long been connected with the concepts of decentralization and autonomy. A fundamental component of this principle is self-custody, or the habit of safely holding one’s own Bitcoin. It ensures that traders retain complete control over their digital assets without having to rely on third-party services such as exchanges.
According to Coinglass, the total Bitcoin balance on all exchanges was 1.13 million BTC on May 9, 2023, a decrease of roughly 15% from May 7, 2023. This amounts to around 6% of the total Bitcoin supply, which is now around 18.8 million BTC. The ratio was last this low in December 2017, when Bitcoin hit a peak of over $20,000 per coin.
According to data from the crypto analytics portal Santiment, only 5.84% of the supply is held on cryptocurrency exchanges. It’s worth mentioning that data may differ between platforms owing to potential changes in how exchange wallets are identified.
The decrease in Bitcoin supply on exchanges shows that more users are keeping their coins rather than selling them back to exchange wallets. This could be an indication of greater trust and interest in Bitcoin as a store of value and inflation hedge, especially in light of the continuous economic instability and monetary stimulus.
Some users may self-custody their cash, as many do not trust centralized systems to retain their funds for them, especially if they are not actively trading on these platforms.
As previously reported by CryptoGlobe, former Goldman Sachs executive Raoul Pal recently expressed optimism about the future of cryptocurrency markets. He believes the crypto market will recover from its current gloomy situation faster than it did in 2019, with significant growth expected over the next half year.
Nonetheless, a Goldman Sachs survey found a significant drop in enthusiasm for cryptocurrency among wealthy family office investors, a result linked to the crypto market’s chaotic volatility over the previous year.
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