Last Updated: 11 May 2023
Bitcoin’s supply on exchanges has hit its lowest ratio in over five years, indicating a shift in trading patterns among cryptocurrency users. This suggests that more traders are interested in self-custody, which means storing their digital assets securely without relying on third-party services like exchanges. The decrease in supply on exchanges reduces the amount of Bitcoin that could potentially be sold back on the market, making it easier for BTC’s price to rise if demand increases.
Bitcoin Supply on Exchanges at a Five-Year Low
According to Coinglass, the balance of Bitcoin on all exchanges was 1.13 million BTC as of May 9, 2023, down by almost 15% since May 7, 2023. This represents about 6% of the total supply of Bitcoin, which is currently around 18.8 million BTC. The last time the ratio was this low was in December 2017, when Bitcoin reached a high of nearly $20,000 per coin.
Self-Custody and Decentralization
Self-custody is a key element of the principle of decentralization and autonomy associated with cryptocurrency, particularly Bitcoin. This practice ensures that traders maintain complete control over their digital assets, without relying on centralized platforms like exchanges. Increased interest in self-custody indicates that more users are holding their coins for the long term, rather than selling them back to exchange wallets.
Confidence in Bitcoin as a Store of Value and Hedge Against Inflation
The decline in Bitcoin supply on exchanges could be a sign of increased confidence and interest in Bitcoin as a store of value and a hedge against inflation, particularly amid ongoing economic uncertainty and monetary stimulus. Some users may be self-custodying their funds because they do not trust centralized platforms to hold their funds for them, especially if they are not actively using these platforms to trade.
Raoul Pal’s Optimistic Outlook
Former Goldman Sachs executive Raoul Pal recently offered an optimistic outlook on the trajectory of the cryptocurrency markets. He anticipates that the crypto sector will rally out of its current bearish state faster than it did in 2019, expecting considerable growth within the next half-year.
Decline in Enthusiasm Among Wealthy Family Office Investors
Despite Raoul Pal’s optimistic outlook, a Goldman Sachs survey has shown a marked decline in enthusiasm for cryptocurrencies among wealthy family office investors. The outcome is attributed to the tumultuous volatility experienced in the crypto market over the past year.
Conclusion
The decrease in Bitcoin supply on exchanges indicates that more traders are interested in self-custody, which could be a sign of increased confidence in Bitcoin as a store of value and a hedge against inflation. However, the decline in enthusiasm among wealthy family office investors suggests that there is still some skepticism surrounding cryptocurrencies, despite their growing popularity.
As more traders show interest in Bitcoin and cryptocurrency investing, it’s important to choose a reputable and reliable platform for your investments. eToro and Plus500 are two examples of platforms that offer access to the cryptocurrency market, as well as other traditional markets, with user-friendly interfaces and a range of tools to help investors make informed decisions. By using a trusted platform like Crypto Genius or Bitcoin Storm, investors can participate in the growing cryptocurrency market with greater ease and confidence.
