More and more bitcoin (BTC) holders seem the importance of self custody to realize. By using a self-custodial wallet, you are the only one who has control over the funds and no third party is involved for storage and transactions. Confidence in centralized parties within the world of crypto has of course taken a hit after the many bankruptcies in the past year. The fall of the huge crypto exchange FTX, which was seen by many as very reliable, has most likely left many investors scratching their heads.
Bitcoin on exchanges falls to new low
Crypto analytics platform Santiment shows that the number of bitcoin on crypto exchanges has fallen to the lowest point in five years. Currently, only 5.84% of the total circulating supply is held on the centralized exchanges. The last time this metric was this low was in December 2017.
📉 The amount of #Bitcoin on exchanges is now at its lowest ratio since December, 2017. The five and a half year low is a good sign of increased interest in self custody for traders, and less potentially at risk to be sold back to exchange wallets. 👍 https://t.co/U3n9McxcnH pic.twitter.com/8NjZLf0k2D
— Santiment (@santimentfeed) May 8, 2023
Self-management of BTC became increasingly popular from the beginning of 2022 and this development continued throughout the year. In that respect, 2023 was an educational year in which many investors, due to all the scandals within the crypto landscape, discovered the importance of self-custody. After November last year, when the demise of FTX hit the front page of crypto news, there was a sharp drop in the number of bitcoin on centralized exchanges. At the time, the number fell below 7%.
Bitcoin outflow on Binance
Earlier this week you could read in the Bitcoin news that Binance was experiencing a huge bitcoin outflow. On Sunday night, the world’s largest crypto exchange decided to temporarily suspend BTC withdrawals, as its network was flooded with transactions from Ordinals, the new technology that enables the launch of non-fungible tokens (NFTs) and recently BRC-20 tokens on the Bitcoin network.
However, the fear surrounding the large outflow was unjustified, as it was in reality an internal reorganization. The bitcoins were simply moved to other wallets of Binance itself.