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Just 1.3 million Bitcoin left circulating on crypto exchanges

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Bitcoin (BTC) supply is shrinking to levels not seen in years, which is good news for an orange Christmas. According to a recent tweet from CryptoRank, cryptocurrency exchanges own only 6.3% of the total Bitcoin supply, or 1.3 million BTC.

The decrease in supply is nothing new; it has been heading down since the Bitcoin block reward was halved in 2020. The availability of BTC on exchanges followed suit, gradually declining over the past year. In October 2020, shortly before the 2020 Christmas all-time highs, exchange wallets accounted for 9.5% of the BTC supply, and 7.3% in July this year. The 6.3% result for December is the lowest since 2021.

Coinbase’s BTC wallet dominance is also eroding. The American exchange used to hold more Bitcoin than the rest of the world’s exchanges combined. Over the past year, its dominance has slipped from 50.52% to 40.65%.

There are more bitcoins in cold storage than mined

The announcement comes after a slew of favourable price indicators that line up with Bitcoin’s upward trend. To begin with, the illiquid BTC supply has frozen for the winter, with a monthly supply of 100,000 BTC shifting from “liquid” to “illiquid.” In other words, there are more bitcoins in cold storage than are being mined.

The on-chain analytics firm Glassnode has released more encouraging news about exchange behaviour. The seven-day moving average for BTC’s exchange inflow volume just hit a five-month low of 978.452 BTC and has been drifting downward week over week. With fewer BTC being transmitted to exchanges, the exchange supply shortage may persist.

Some BTC hodlers would trust exchanges with the custody of their keys

Furthermore, many retail investors and some businesses keep their BTC on exchanges, implying that the “illiquidity” of BTC could be considerably lower. Instead of putting their BTC into cold storage, some BTC hodlers would trust exchanges with the custody of their keys.

Despite the best efforts of Bitcoiners like Andreas Antonopolous to ensure that “not your keys, not your Bitcoin” is part of the everyday BTC motto, Binance CEO and co-founder Changpeng Zhao has pushed the hot wallet practice.

As a result, while 1.3 million BTC are held on exchanges, they may not be “circulating”. And instead add to the illiquid supply.

Despite calls for a “Santa Rally” based on bullish data, the bears are still in the game. According to data from Glassnode, 24.6% of all BTC supply is above $47,000, according to a tweet from BullRun Invest.

It implies that almost a fourth of the BTC purchased at those prices is now worthless. There may be fewer presents beneath the tree tomorrow if BTC fails to reach the 50s.

Analyst lists 21 factors calling for Bitcoin price upside

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