[2020-07-30] Bitcoin Held by Exchanges Drops to 2019 Levels, Demand Rising

[Karartma1]

As July comes to a close, the amount of Bitcoin (BTC) held by major cryptocurrency exchanges has reached its lowest level since late May 2019. At that time, Bitcoin’s price was around $8,000 before continuing toward its 2019 high of $12,967 on July 11, 2019.

Roughly 10% of Bitcoin held by exchanges

The Bitcoin balance held by major exchanges has been dropping significantly since mid-March 2020 following the Black Thursday crash on March 12 and subsequent recovery.

Read more https://cointelegraph.com/news/bitcoin-held-by-exchanges-drops-to-2019-bull-run-levels-demand-rising

[Darker45]

This could mean a lot of things but mostly that Bitcoin owners or traders are now pulling out their Bitcoins for safekeeping. Which could mean that they are not anymore interested to play with the charts with those withdrawn Bitcoins. Which could further mean that they are on to some long-term plans with those BTCs rather than on making short term gains. I am now positively looking forward to Bitcoin's price seeking higher levels within the year. 

[Karartma1]

This could mean a lot of things but mostly that Bitcoin owners or traders are now pulling out their Bitcoins for safekeeping. Which could mean that they are not anymore interested to play with the charts with those withdrawn Bitcoins. Which could further mean that they are on to some long-term plans with those BTCs rather than on making short term gains. I am now positively looking forward to Bitcoin's price seeking higher levels within the year. 

When people will truly realize what does it mean that BTC has a true fixed supply and that new bitcoins can not be created at will then you will see far less btc held into exchanges.

[o_e_l_e_o]

Hopefully this is a sign people are starting to be their own bank a bit more.

Coinbase, for example, say they are holding over 1 million bitcoin. Their daily volume of bitcoin trading according to coinmarketcap comes to around $160 million for all bitcoin markets combined, which is less than 15,000 bitcoin, which is 1.5% of their holdings, even if every bitcoin trade is using unique funds (which they won't be). With such figures, a maximum of 10% of the bitcoin they are holding is being traded in a given week. There is no reason for the other 90% of coins to be in their possession.

With the ever increasing number of account hacks and exchange hacks, people will do well to withdraw their coins and hold them securely.

[Lucius]

Coinbase, for example, say they are holding over 1 million bitcoin. Their daily volume of bitcoin trading according to coinmarketcap comes to around $160 million for all bitcoin markets combined, which is less than 15,000 bitcoin, which is 1.5% of their holdings, even if every bitcoin trade is using unique funds (which they won't be). With such figures, a maximum of 10% of the bitcoin they are holding is being traded in a given week. There is no reason for the other 90% of coins to be in their possession.

It follows from the above data that a very large part of crypto owners do not want to be responsible for the security of their BTC, but shift this responsibility to in this case some kind of crypto bank. But Coinbase and similar large exchanges are very interested in users using them as wallets, not just as buying or selling platforms - which is kind of weird if we know what a delicate business this is.

Traditional banks, of course, have a financial interest in keeping their customers 'money because they charge for it through various services - but they also use clients' money for various investments. What does Coinbase, on the other hand, have to do with keeping 98% of its user funds in cold storage - other than the fact that something could go wrong at any moment?

What really worries me (although I don't know how much can be done in practice) is that the authorities of any country say that BTC is illegal and seize all funds at a crypto exchange - then maybe people will learn what it means not to own private keys.

[o_e_l_e_o]

Traditional banks, of course, have a financial interest in keeping their customers 'money because they charge for it through various services - but they also use clients' money for various investments. What does Coinbase, on the other hand, have to do with keeping 98% of its user funds in cold storage - other than the fact that something could go wrong at any moment?

Who's to say that Coinbase aren't investing clients' coins without their knowledge? Various other exchanges - including very large ones such as Huobi and OKCoin - have previously been caught secretly investing customers' funds and essentially running a fractional reserve system. It certainly wouldn't be the shadiest thing that Coinbase had done.

Outside of that, it gives them weight. It allows them to lobby for changes, even stupid ones, like they did when they supported SegWit2x and Bitcoin Unlimited. They can use such numbers as advertising to attract more newbie users. If people are already using them as a wallet, then they are far more likely to also use them as an exchange.

Not to mention it also gives them more data. We know Coinbase love harvesting data and selling their privacy invading tools. The more users they have, the more data they have, and so the more money they can charge.

It's all about profits.

[bbc.reporter]

Is there data on altcoins held on exchanges? Demand on bitcoin will certainly be not forever. I reckon many investors might begin to speculate that bitcoin has become overvalued and invest on the most popular altcoins.

2020 is the year of the Defi hype hehehe.

[Karartma1]

Is there data on altcoins held on exchanges? Demand on bitcoin will certainly be not forever. I reckon many investors might begin to speculate that bitcoin has become overvalued and invest on the most popular altcoins.

2020 is the year of the Defi hype hehehe.

Very laughable comment. Bitcoin overvalued?
Please go read the Bitcoin Standard and come back when you fully understand the bitcoin mechanics which you probably forgot.
 

[Lucius]

Who's to say that Coinbase aren't investing clients' coins without their knowledge? Various other exchanges - including very large ones such as Huobi and OKCoin - have previously been caught secretly investing customers' funds and essentially running a fractional reserve system. It certainly wouldn't be the shadiest thing that Coinbase had done.

We can’t know for sure, though I wouldn’t be at all surprised if they really do that - therefore, it would be really desirable to have some possibility to determine whether all the funds of their users are really in hot/cold wallets or are being invested without their consent. Is there any external audit in the US to determine if they are really doing what they present to the public or if things are actually completely different?

 

Not to mention it also gives them more data. We know Coinbase love harvesting data and selling their privacy invading tools. The more users they have, the more data they have, and so the more money they can charge.

It's all about profits.

You're right, I forgot how much the user's data is worth, and it's a public secret that no one protects that data in the way it's stated in the privacy policy. I'm glad I've never created an account there or on a similar platform, and I honestly don't like so much centralization at all - in the long run, if people don't get smart, companies like this will really have too much of an impact on Bitcoin.

[o_e_l_e_o]

if people don't get smart, companies like this will really have too much of an impact on Bitcoin.

I think they already do, even for someone like me who doesn't use any centralized exchange. Whenever I am trading peer-to-peer, especially on the forum, I always tell the other party if the coins I am sending them are coming from a mixer, a coinjoin, or a casino/sportsbook. Many exchanges "look down" on bitcoin from these sources, and I don't want to be responsible for someone else having to jump through hoops with some useless support or having their account locked, even temporarily.

When the privacy invasion of these centralized exchanges starts affecting people who aren't even their customers, then they've definitely gone too far.

[Harlot]

Is there data on altcoins held on exchanges? Demand on bitcoin will certainly be not forever. I reckon many investors might begin to speculate that bitcoin has become overvalued and invest on the most popular altcoins.

2020 is the year of the Defi hype hehehe.

If this was the case then it will reflect on Bitcoin's price as of this moment where people will be selling their Bitcoin in exchange for some other coins thus decreasing the value of Bitcoin but the thing is it's not decreasing but rather being pulled out in exchanges. These Bitcoin pulled out have no mentions of them being sold or liquidated which will obviously shown in the price. So maybe it is right to speculate that people see their Bitcoin more valuable right now that's why they are keeping it maybe on their hardware wallets or any type of non-custodial wallet.

[bbc.reporter]

Is there data on altcoins held on exchanges? Demand on bitcoin will certainly be not forever. I reckon many investors might begin to speculate that bitcoin has become overvalued and invest on the most popular altcoins.

2020 is the year of the Defi hype hehehe.

Very laughable comment. Bitcoin overvalued?
Please go read the Bitcoin Standard and come back when you fully understand the bitcoin mechanics which you probably forgot.
 

I said investors might speculate that bitcoin has become overvalued. Please read the chart from 2016 to 2019 and come back if you understood how investors behave.

[Karartma1]

Is there data on altcoins held on exchanges? Demand on bitcoin will certainly be not forever. I reckon many investors might begin to speculate that bitcoin has become overvalued and invest on the most popular altcoins.

2020 is the year of the Defi hype hehehe.

Very laughable comment. Bitcoin overvalued?
Please go read the Bitcoin Standard and come back when you fully understand the bitcoin mechanics which you probably forgot.
 

I said investors might speculate that bitcoin has become overvalued. Please read the chart from 2016 to 2019 and come back if you understood how investors behave.

Fair enough, my bad. I am sorry.
My brain reads "bitcoin overvalued defi altcoin" and suddenly makes me go crazy.
That's it. Friends 

[Lucius]

I said investors might speculate that bitcoin has become overvalued. Please read the chart from 2016 to 2019 and come back if you understood how investors behave.

A serious investor will never invest in some altcoins without meaning and purpose, especially not after what happened during 2018/2019. Only those who deal with pump dump schemes and those who think that BCH/BSV is a better choice then Bitcoin can say/speculate that price is overvalued. After 11 years, those same investors must have learned something - only Bitcoin remained a profitable investment almost all the time - and look at how many projects survive only one year after they appear on the market.

Bitcoin was cheap in 2013, it was cheap in 2015, it is cheap even today given how much potential there is for growth in the future.

[prehisto]

I dont know why the crash did happen, I did not make sense for me. At the time I tought, that this is it for me - I dont belive in crypto anymore. Becasue when the traditional markets fail which was happening at the time, crypto should emerge not go with them.

Now I am back here and convinced that BTC will make a big noise this year. I suppose opinions can chnage over time 

[bbc.reporter]

I said investors might speculate that bitcoin has become overvalued. Please read the chart from 2016 to 2019 and come back if you understood how investors behave.

A serious investor will never invest in some altcoins without meaning and purpose, especially not after what happened during 2018/2019. Only those who deal with pump dump schemes and those who think that BCH/BSV is a better choice then Bitcoin can say/speculate that price is overvalued. After 11 years, those same investors must have learned something - only Bitcoin remained a profitable investment almost all the time - and look at how many projects survive only one year after they appear on the market.

Bitcoin was cheap in 2013, it was cheap in 2015, it is cheap even today given how much potential there is for growth in the future.

Agreed. However, bitcoin's popularity is growing every year and brings on many new users, developers, traders and investors who have not learned the lessons that you have learned about the cryptospace.

[Lucius]

Agreed. However, bitcoin's popularity is growing every year and brings on many new users, developers, traders and investors who have not learned the lessons that you have learned about the cryptospace.

I start from the premise that each person is personally responsible for his money and what he will do with it at any time. But I think we have some moral obligation to warn inexperienced people on the forum and in real life what Bitcoin is and what altcoins really are.

I think things are changing for the better though, not only do users realize they need to be their own bank - but also that a good percentage of altcoins (more than 50% in the top 50) is in the red despite the rising price of BTC.

[Kakmakr]

I am very surprised about this... I would have thought with loads of people losing their jobs and a huge slump in the global economy, people would sell their bitcoins and they will not have enough disposable cash to invest in bitcoins. 

I wonder if the political tension between China and America are driving people to look for safe havens and if traders are pushing wealth into Bitcoin because it is one of the Commodities that are still out performing other Commodities in the markets. (When there are a 10% to 20% Bitcoin price increase.. speculators flock to Bitcoin.) 

[Coin-Keeper]

I think most of us here know that exchanges are a BAD security risk, especially for inside jobs (bad employees).  Therefore we see reduced exchange use in that light.  I think its deeper than that but its tough to look through an average users eyes when I spend time in forums reading about hacked exchanges and the loss of control with their policies at times.

[bbc.reporter]

Agreed. However, bitcoin's popularity is growing every year and brings on many new users, developers, traders and investors who have not learned the lessons that you have learned about the cryptospace.

I start from the premise that each person is personally responsible for his money and what he will do with it at any time. But I think we have some moral obligation to warn inexperienced people on the forum and in real life what Bitcoin is and what altcoins really are.

I think things are changing for the better though, not only do users realize they need to be their own bank - but also that a good percentage of altcoins (more than 50% in the top 50) is in the red despite the rising price of BTC.

I much agree. However, I come from the premise that in the world of finance and economics, there is something called the greater fool theory. It cannot be stopped and the market is only the way it is.