According to Santiment, a cryptocurrency data analytics platform, only 5.8% of Bitcoin (BTC) in circulation is currently held on exchanges. Despite this relatively small proportion, the price of Bitcoin continues to face difficulties. This suggests that other market factors, such as investor sentiment and external events, may have a greater influence on the cryptocurrency’s price. This information is valuable for traders and investors looking to understand the dynamics of Bitcoin’s price movement.
New data from crypto analytics platform Santiment reveals that the supply of Bitcoin (BTC) on exchanges has reached its lowest level in approximately six years. Only 5.8% of the total BTC supply is currently held on trading platforms, a level that has not been seen since December 17, 2017.
Declining BTC Supply on Exchanges
The decrease in BTC supply on exchanges suggests that holders of the cryptocurrency are still hesitant to trust centralized platforms. Instead, they are opting for cold storage and self-custodial methods to secure their assets.
This trend towards self-custody gained momentum towards the end of last year after the collapse of FTX, one of the largest crypto exchanges. The subsequent bankruptcy filing of FTX and the uncertainty it caused led to a surge in BTC outflows from major exchanges, including Binance.
While investors started turning to self-custodial methods in the first quarter of 2022, the catastrophic events that unfolded that year further accelerated the outflows. Between Q4 2022 and Q1 2023, the BTC supply on exchanges dropped to 7%. By May, it had plunged to 6% and is currently hovering around 5.8%. This decrease in supply is driven by fear, uncertainty, and doubt (FUD) regarding the stability of exchanges.
???? Just 5.8% of #Bitcoin is currently sitting on exchanges, which is officially the lowest level #crypto’s top market cap asset has seen since December 17, 2017. We are also continuing to see reasonable amounts of $BTC whale transactions (57.4K per week). https://t.co/c0vfjFEvvG pic.twitter.com/nNnz2JDJyb
— Santiment (@santimentfeed) August 24, 2023
Ongoing Whale Activity
Despite the decreasing supply on exchanges, Santiment’s analysis also reveals continuous significant activity in whale transactions. These transactions involve bitcoin transfers worth over $100,000 and are averaging 57,400 per week. Interestingly, this level of activity has persisted even amidst the recent drop in BTC’s price to the $25,000 level.
This observation aligns with another recent on-chain analysis, which uncovered that whales and sharks holding 10 to 10,000 BTC accumulated over 11,600 BTC worth around $308 million between August 17 and August 24. The existence of around 156,660 wallets holding similar amounts of BTC further supports the presence of significant whale activity.
The surge in whale and shark accumulation coincided with BlackRock’s filing for a spot Bitcoin exchange-traded fund (ETF) in June. This move by the world’s largest asset manager prompted other traditional finance giants to follow suit, contributing to the increased interest and activity in the BTC market.