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Only 5.8% of Bitcoin in Circulation is Held on Exchanges, Yet Bitcoin Price Faces Challenges: Santiment
Crypto analytics platform Santiment has discovered that the supply of bitcoin (BTC) on exchanges has dropped to its lowest point in approximately six years.
On-chain data examined by the firm indicates that merely 5.8% of the total BTC supply resides on trading platforms, a level last recorded on December 17, 2017.
Bitcoin Supply on Exchanges Continues to Decline
The diminished BTC supply on exchanges suggests that holders of the asset have yet to restore their confidence and trust in centralized platforms. They continue to favor cold storage solutions and self-custodial approaches.
The trend towards self-custody intensified towards the end of the previous year following the downfall of one of the largest cryptocurrency exchanges. FTX collapsed in November and subsequently filed for bankruptcy, impacting other crypto firms and leaving users and their assets in uncertainty. This resulted in increased BTC withdrawals from major exchanges, including the largest platform, Binance.
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Although investors began to favor self-custodial methods in the first quarter of 2022, the disastrous events of that year further accelerated the outflows from exchanges. The amount of BTC on these platforms decreased to 7% between Q4 2022 and Q1 2023. By May, the supply had fallen to 6%, currently resting at around 5.8%. This indicates that the present level is driven by fear, uncertainty, and doubt (FUD) regarding which exchange might be the next to fail.
Significant BTC Whale Activity Continues
While the BTC supply on exchanges is on the decline, Santiment has observed ongoing substantial activity in whale transactions involving the asset. According to the platform, bitcoin transactions exceeding $100,000 in value are averaging 57,400 weekly. These transactions have persisted despite BTC’s recent drop to the $25,000 mark last week.
Santiment’s report is consistent with a recent on-chain analysis, which revealed that certain whales and sharks holding between 10 to 10,000 BTC had accumulated over 11,600 BTC valued at approximately $308 million between August 17 and August 24. As of yesterday, around 156,660 wallets were holding between 10 to 10,000 BTC, supporting the assertions of notable whale activity.
The accumulation surge among BTC whales and sharks increased following the application by the world’s largest asset manager, BlackRock, to the U.S. Securities and Exchange Commission for a spot Bitcoin exchange-traded fund in June, prompting additional submissions from other traditional finance entities.
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