Santiment, a blockchain analytics provider, has revealed that the supply of Bitcoin on crypto exchanges is at its lowest level since February 2018, at just 6.4%.
This rapid shift to self-custodial methods is likely the result of regulatory actions from the SEC against two of the top exchanges, Binance and Coinbase. These companies were recently sued and accused of violating securities laws.
Data from Santiment shows that crypto users continue to move their Bitcoins away from exchanges. Currently, only 6.4% of the BTC supply is held on these platforms, while the figure was 16% at the beginning of 2020. The last time such a low percentage was in February 2018, in the context of a market correction that lasted for several months.
A key factor contributing to the downtrend in supply on exchanges is the recent legal battles the US SEC has waged against Binance and Coinbase, two leading crypto companies.
The SEC’s harsh action began on June 5, accusing Binance, CEO Changpeng Zhao and Binance.US of providing unlicensed products to customers. The next day, the SEC targeted Coinbase and stated that Coinbase operated as a broker, clearinghouse, and national stock exchange without a license.
Santiment’s chart also shows that the most BTC withdrawals from exchanges occurred after FTX’s struggles late last year. Therefore, there is reason to believe that the percentage of Bitcoins stored on exchanges will continue to decrease because of the uncertainty surrounding trading platforms.
However, this is generally seen as a positive for the asset as the selling pressure will be less due to less Bitcoin being stored on exchanges.