Late last year, crypto exchange FTX went bust amid much turmoil. This created a major lack of trust in the crypto market and many people withdrew their coins from other exchanges as a precaution. The effects are still visible today, the number of bitcoins on exchange balance sheets has not been as low as it is now since early January 2018.
Very few bitcoins on exchanges
This is according to CryptoQuant’s on-chain data. According to the on-chain analytics firm, as of this writing, there are only 2.09 million BTC on exchanges, which is about 10% of all BTC in circulation. At the current Bitcoin price, this is worth around 51.7 billion euros.
That sounds like a lot, but this number has not been as low as it is now since the beginning of January 2018. 2018 was a year of a major bottom in bitcoin price and a long bear market. This could indicate that the low number is not so positive.
Matrixport senior researcher Markus Thielen told CoinDesk that this is also a sign of a lack of trust. The decline in FTX seems to be the main reason for this. After all, the bankruptcy caused problems not only for FTX’s customers, but also for a large number of other companies. This is how Silvergate, Genesis and many others lost money or even went bankrupt.
Shrinking Forex Reserves Are Good For Bitcoin?
Luckily, it also has a positive side. Because the small number of coins indicates that no sale is currently planned. After all, the coins reside in wallets that are not trading platforms, so investors have great confidence in Bitcoin.
It remains important to keep an eye out, but Glassnode also regularly describes shrinking foreign exchange reserves as a favorable factor for the price. Furthermore, according to a recent study by Bitfinex, loyal HODLers only buy coins, which no doubt contributes to the low number of coins.
It should be emphasized that CryptoQuant mentions “all exchanges”, however this refers to all exchange wallets known to the company. There are a multitude of exchanges and many may have already gone bankrupt, but in reality the total amount will probably be a bit higher. Still, the amount mentioned by CryptoQuant will make up the vast majority.