key takeaways
- 11.8% of the bitcoin supply is currently held on exchanges, the lowest mark since 2017
- The supply of bitcoin on exchanges has been falling steadily since March 2020, when the crypto pandemic overtook the bull run
- Basically, people are drawn to bitcoin to participate in the vibrant crypto ecosystem with high volume and activity and lots of scope for yield.
- Today, volume and interest have dropped, but the pattern of fleeing bitcoin to exchanges continues for different reasons.
- Bitcoiners Leaving Exchanges in Recent Months Likely Due to Fears Over Security and Transparency, Surge After FTX Fall
“Not your keys, not your coins”.
One of the oldest sayings in crypto. and a year later it saw one of the largest exchanges shocking gamble Customer Asset Secretly, many wish they had paid more attention to this.
Now people are listening. Although in truth, this has been happening throughout the pandemic. Bitcoin balances on exchanges are now down to 2.27 million — the lowest mark since March 2018, a month of Drake’s “God’s Plan” being played over and over on the radio.
The mark is even lower than the overall supply. There is currently 11.8% of the bitcoin supply on exchanges. This is the lowest level since December 2017.
Crypto fans will remember December 2017 as the month when bitcoin went downright bananas. I remember exactly where I was when I saw bitcoin break the $20,000 mark for the first time; It felt like a seminal moment.
Coincidentally, this marked a top with the orange coin at $7,500 seven weeks later. Within a year, it was no more than $3,000. It was a long and barren bear market, in which fortunes did not change until the arrival of COVID in 2020.
Where is bitcoin going?
I say “not your keys, not your coins”, but that’s not the only thing driving the movement of coins through exchanges.
As shown in the chart above, the supply of bitcoin on exchanges has been decreasing since March 2020. This is also the month when covid started. For as long as I’ve been in crypto, I also believe this was the scariest time ever – bitcoin plummeted from $10,000 to near $5,000 in a horrific 48 hours as markets around the world tried to figure out what to do with it. What exactly was this COVID-19 thing.
But after this the bullish market got bullish. So, why is bitcoin falling on exchanges during this period?
The truth is, ironically, it may be at least in part the exact opposite of quantification behind “Not Your Keys, Not Your Coins.” This is due to the rise of crypto lending platforms during the bull run – companies like Celsius, BlockFi, Voyager Digital and so on.
These platforms offered good yields on bitcoin, and this attracted billions of dollars inflow. Now, you can notice one thing about those names: Today, they’re all bankrupt. Which means that, apparently, the coins leaving the exchange in recent months are for other reasons.
So there could be a dual explanation here: During the bull run, coins were leaving exchanges to yield on centralized platforms. Or they were leaving the exchange for the DEX or other destinations. Crypto was booming at this time; There was no dearth of produce to do or earn.
However, today the volumes have come down. Looking at the total value locked within DeFi, it is down from $50 billion due to be up to $180 billion in December 2021. This is a drop of 72%. Simply put, prices are down, volumes are down and interest is down in general.
This falling volume and interest has made bitcoin less likely to pull exchanges. But this decline may have been reversed by people pulling bitcoin at a similar rate, but for a completely different reason: to be safe, and to send to cold storage. you can thank Sam And for this many other scams.