According to data shared by Santiment this Tuesday (28), the supply of bitcoin and ethereum in cryptocurrency exchanges reached an all-time low of the past five years.
According to the company, the uptake of digital currencies from so-called exchanges has accelerated enormously in 2022, after ending many projects.
Since November 2022, when FTX went bankrupt, the pace of withdrawals has been even higher, with investors fearing losing everything in brokerages.
Bitcoin stocks in brokers are falling to a five-year low and movement could be promising
Not only bitcoin and ethereum stocks have fallen on exchanges, but also the stablecoin Tether, indicating that fear is common in the market.
This is because, following the collapse of investor confidence in platform custody services, the majority of the market now prefers to keep their cryptocurrencies to themselves.
According to Santiment, the trend of self-custody is only growing and removing liquidity from exchanges could be positive for bitcoin, as it reduces the likelihood of mass sales in the near future, which would push the price of the currency down.
“The trend in crypto, especially since September, is that coins are rapidly moving towards self-custody. This trend increased after the collapse of FTX. Either way, with BTC and ETH on exchanges at 5-year lows, future sales will be limited.
👋 Into the trend #crypto, especially since September, coins have quickly gone into private ownership. This trend continued after the #FTX to collapse. Anyway, with both $BTC And $ETH around 5 years of low stock market stocks, future sell-offs will be limited. https://t.co/VrWx8dfcMR pic.twitter.com/10ksxRamkx
—Santiment (@santimentfeed) February 28, 2023
The Cruel Question: Keeping Digital Currency in Wallets or Exchanges?
When many investors get involved in bitcoin, they see different facilities in brokers to buy and store their coins. However, unlike the stock market, many cryptocurrency exchanges have no regulations or additional protections for customers.
Thus, the user himself delegates the custody of his coins to third parties, which can be hacked or cause other problems. The biggest advantage of having coins in brokerages, in the case of traders, is the ease of exchanging for other cryptocurrencies in market operations, aiming for possible additional profits.
In the case of wallets, mainly bitcoin, users can store their coins in more secure environments that are difficult for hackers to access if configured correctly. In this case, custody is to the holders of the digital currency themselves.
The downside to using wallets can be lower instant liquidity, a fact that doesn’t have much impact on users who just buy and hold. Either way, it seems that bitcoin and ethereum investors prefer the safety of their wallets after platform crashes.
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Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
