The supply of Bitcoin held on the exchanges is at the lowest level since Feb 2018 as traders remain steadfast on self-custody and secure their assets.
Prominent data platform Santiment has confirmed that Bitcoin exchanges now only possess 6.4% of the crypto, down from 16% after the “Black Thursday” meltdown of 2020, when the value of BTC fell by 40%.
The reason behind the massive declines has been attributed to the growing uncertainty surrounding Binance & Coinbase lawsuits.
Santiment holds that this pattern might persist as long as this SEC litigation looms.
Last week, the Security and Exchange Commission unleashed a barrage of legal proceedings targeting the two biggest trading platforms.
The complaint identified various cryptocurrencies that the SEC might classify as “crypto asset securities” on Coinbase, including the well-known coin Solana [SOL], Cardano’s ADA token, MATIC, BNB, BUSD, etc.
Following the developments, crypto prices fell to their lowest levels since March, eroding the early gains.
Despite a dramatic decline that saw Bitcoin hit its lowest point in 11 weeks, the leading cryptocurrency recovered and crossed the $26k mark in the days that followed.
That being said, this ain’t the first time exchanges’ BTC reserves have fallen to levels last seen in early 2018.
BTC stash on exchanges started its freefall coinciding with the COVID-19 market crash and accelerated through the prolonged 2022 bear market to the current levels.
In the words of William Clemente, co-founder of Bitcoin-focused research firm Reflexivity, the exchange balance lows mean they now hold less BTC than the oldest holder addresses.
“There is now more Bitcoin that hasn’t moved in at least 10 years than there is on exchanges. Wild stat,” he commented on Feb. 28.
Bitcoin HODlers’ Behaviour
After enduring a tough bear market in the previous year, holders have strengthened their fortitude in 2023.
Glassnode, a top-tier data platform, noted that an increasingly large proportion of supply is held by smaller entities. After the LUNA collapse, Bitcoin entities with fewer than 10 BTC [shrimps and crabs] showed their ability to endure hardship.
In a recent insight published by Glassnode, these groups have expanded their relative share of the circulating supply from 13.72% to 17.54%, a 3.82% increase equivalent to +790K BTC, it added.
The supply distribution of Bitcoin continues to draw significant interest for capital flow analyses and tracking the actions of investor cohorts.