Bitcoin Supply on Exchanges Hits 5-Year Low Amid Investor Exodus Due to Regulatory Pressure

Declining confidence in exchanges triggers Bitcoin exodus to self-custody, marking a historic low as regulatory scrutiny increases.

The amount of Bitcoin (BTC) held on cryptocurrency exchanges has reached a five-year low, with investors increasingly withdrawing their assets. This trend is largely attributed to growing regulatory pressure on crypto trading platforms, leading to a decrease in investor confidence.

According to data from crypto metrics platform Santiment, the total supply of Bitcoin on exchanges has dropped to just 5.38%, the lowest since December 2017. This decline is believed to be a result of investors moving their Bitcoin into self-custody due to diminishing trust in exchanges. Recent regulatory actions, such as the settlement between Binance and US regulators and the lawsuit against Kraken by the US Securities and Exchange Commission (SEC), have further fueled this trend.

💸 #Bitcoin's supply on exchanges has continued moving into self custody, as exchange reputation continues to diminish. Meanwhile, the 10 largest #Tether exchange wallets hold $15.23B, pushing exchange buying power to its highest level in 17 months. 💪 https://t.co/AtjD9ve3YO pic.twitter.com/XJ0uuTiAZx

— Santiment (@santimentfeed) November 29, 2023

In contrast, the ten largest crypto wallets on exchanges currently hold $15.23 billion in Tether (USDT), marking a 17-month high in exchange power. This suggests that while Bitcoin holdings are decreasing, the influence of exchanges is not necessarily diminishing.

Despite the declining amount of Bitcoin on exchanges, the cryptocurrency’s price has been moving in the opposite direction. As of the latest update, Bitcoin was trading at $38,240, up 3.14% in the last 24 hours. This price movement has been inversely correlated with the supply of Bitcoin on exchanges since early June 2023.