Bitcoin Balance on Exchanges Reducing

[buwaytress]

Not to mention that exchanges have been known to socialise losses whenever there's a bad crash or liquidity wipe -- thereby literally reducing the account balance you have on Bitcoin. Can't recall the exact names but we've had some big names in the space in past few years do this.

They all fear "bank runs" because when it comes to it, I dread to think how many exchanges actually have enough in their wallets to honour every single withdrawal.

[Leviathan.007]

According to what you said and if the information is accurate, we can get one important from this information. Decreasing amount of bitcoin on the crypto exchanges means the holder and owners of bitcoin have no interest on selling their bitcoins, at lest not currently and not with this price, they prefer to hold the bitcoin on their wallets for a longer time. This means they are waiting for a higher prices and hopefully this can give us another positive signal for the increasing price of bitcoin in mid and long term.

[jaysabi]

One indicator is telling me that Bitcoin is preparing for a new major bull run and we are still early.

If we look statistics from 2010 number of Bitcoins sent to exchanges was mostly growing up until February 2020, with few breaks in 2017 and 2018.

Since February 2020 we can see clear reducing number of Bitcoins from Exchanges, and withdrawing to personal wallets.

This is good for many reasons, but most important is that people are in control of their bitcoins.

Bitcoin on exchanges from 2010 - 2020

https://glassnode.com/

Bitcoin on exchanges from October 2019 - October 2020

https://glassnode.com/

One data point doesn't even make a correlation, let alone a case of causation.  At least you have a thesis to rely on that can be tested over time, not like some of these chart fundamentalist quacks running around promising they know where btc is going to trade because they drew a line connecting a couple points on a graph. But you'll need far more data than what you've presented before anyone takes this theory seriously.

[CaVO32]

One data point doesn't even make a correlation, let alone a case of causation.  At least you have a thesis to rely on that can be tested over time, not like some of these chart fundamentalist quacks running around promising they know where btc is going to trade because they drew a line connecting a couple points on a graph. But you'll need far more data than what you've presented before anyone takes this theory seriously.

You have a point regarding your statement. There's possibility that maybe we are looking at one angle only here and not seeing the whole picture of the situation. But then again, sometimes those charts have other meaning and that is for us to discover. But just looking at the exterior part of it, one reason that I am seeing is that crypto users are now starting to realize that storing their funds in exchanges is not safe, whether top or just a new one in the block. So what they are doing is they are sending it to their respective wallets, where they have their own keys and full control.

[exstasie]

Not to mention that exchanges have been known to socialise losses whenever there's a bad crash or liquidity wipe -- thereby literally reducing the account balance you have on Bitcoin. Can't recall the exact names but we've had some big names in the space in past few years do this.

That really only applies to active positions held on leveraged derivative markets, like futures or perpetual swaps. It can happen because the market depth can be too thin to absorb all the highly leveraged positions.

I guess it could technically happen on spot exchanges that allow leverage, like Bitfinex or Coinbase Pro, but the leverage offered is so low that it's extremely unlikely and historically has never happened. It's impossible on regular spot exchanges that don't offer leverage.

They all fear "bank runs" because when it comes to it, I dread to think how many exchanges actually have enough in their wallets to honour every single withdrawal.

What number would you put on it? How many exchanges are running a fractional reserve?

[MCobian]

It is only natural that there is a decrease in Bitcoin balance on exchanges, considering that it is not safe to store all the coins on the exchanges.
Especially after there was news that KuCoin was successfully hacked, making investors prefer to store Bitcoin in their personal wallets. Another
reason is that many Bitcoin holders do not intend to sell their Bitcoin in the near future, especially seeing the current Bitcoin price which managed
to rise to $ 12,800. Make investors more optimistic about Bitcoin holding for long-term investment. And the safest way to store Bitcoin in the long
term is of course in a hardware wallet, not storing it on exchanges, which are prone to getting hacked.

[Vishnu.Reang]

It is only natural that there is a decrease in Bitcoin balance on exchanges, considering that it is not safe to store all the coins on the exchanges.
Especially after there was news that KuCoin was successfully hacked, making investors prefer to store Bitcoin in their personal wallets. Another
reason is that many Bitcoin holders do not intend to sell their Bitcoin in the near future, especially seeing the current Bitcoin price which managed
to rise to $ 12,800. Make investors more optimistic about Bitcoin holding for long-term investment. And the safest way to store Bitcoin in the long
term is of course in a hardware wallet, not storing it on exchanges, which are prone to getting hacked.

There is no option, which is 100% safe. Even storing in a hardware wallet is risky. Because it is susceptible to damage or robbery. Obviously you can recover the coins using the backup seed, but I have seen people messing up with this part. Either they don't take proper backup, or issues get thrown up during the recovery phase. Soring coins in a paper wallet or online wallet is safe enough, if you are careful enough to take proper precautions such as 2FA.

[buwaytress]

What number would you put on it? How many exchanges are running a fractional reserve?

Since there's no way to prove this without real data, I would say, every exchange probably. Even those who supposedly keep 1:1 assets (like, cough, Tether) have never been able to openly prove this beyond closed-door audits. And every exchange that's ever had something close to a bank run (wallet run or whatever) has had troubles. Even if everything is truly cold storage, it shouldn't take more than a day to get things mobilized (let's be magnanimous and account for timezones).

And yes on socialised losses -- has only happened so far to platforms offering leverage but Mt Gox tried to do it too didn't they? And that was an alleged "hack".

[exstasie]

And yes on socialised losses -- has only happened so far to platforms offering leverage but Mt Gox tried to do it too didn't they? And that was an alleged "hack".

In a general sense, any insolvency (whether from a hack, or from a margin lending default as seen on Poloniex, Okcoin, Huobi, etc.) would be expected to bring socialized losses. I guess I was just referring to the "socialise losses whenever there's a bad crash or liquidity wipe" bit, which is more specifically a leverage issue. To put it one more way: if you want to be insulated from crash-related socialized losses, stay away from exchanges that offer leverage!

[fillippone]

And yes on socialised losses -- has only happened so far to platforms offering leverage but Mt Gox tried to do it too didn't they? And that was an alleged "hack".

In a general sense, any insolvency (whether from a hack, or from a margin lending default as seen on Poloniex, Okcoin, Huobi, etc.) would be expected to bring socialized losses. I guess I was just referring to the "socialise losses whenever there's a bad crash or liquidity wipe" bit, which is more specifically a leverage issue. To put it one more way: if you want to be insulated from crash-related socialized losses, stay away from exchanges that offer leverage!

While this is technically true, going forward, with improved operations from exchanges and above all improved liquidity on the market, the event of the default of a market participant are expected to diminish significatively. Hence reducing the need to "socialise losses" in the first place. At least, this is what I am expecting.

[buwaytress]

In a general sense, any insolvency (whether from a hack, or from a margin lending default as seen on Poloniex, Okcoin, Huobi, etc.) would be expected to bring socialized losses. I guess I was just referring to the "socialise losses whenever there's a bad crash or liquidity wipe" bit, which is more specifically a leverage issue. To put it one more way: if you want to be insulated from crash-related socialized losses, stay away from exchanges that offer leverage!

While this is technically true, going forward, with improved operations from exchanges and above all improved liquidity on the market, the event of the default of a market participant are expected to diminish significatively. Hence reducing the need to "socialise losses" in the first place. At least, this is what I am expecting.

But why not just eliminate this possibility with non-custodial? I'm not saying all these Dexes are the best, but I think if we begin normalising non-custodial solutions for any kind of CEX/DEX (along with simply not allowing for leverage) then we simply leave no room for that decision. Or we just keep allowing users to get burnt until they learn their lessons (not).

[fillippone]

But why not just eliminate this possibility with non-custodial? I'm not saying all these Dexes are the best, but I think if we begin normalising non-custodial solutions for any kind of CEX/DEX (along with simply not allowing for leverage) then we simply leave no room for that decision. Or we just keep allowing users to get burnt until they learn their lessons (not).

I think non custodial DEX's have a long way until they will be able to provide the necessary liquidity and speed of execution of a traditional exchange.
Also I think that, while there is some use case for DEX's, I think a large part of users (the so called "institutional money") simply will neve be able to trade there. ( is ee a very segmented market in the future, amongst Centralised and DEX's).

 

[Spaffin]

Nevertheless, there is a certain percentage of the likelihood that the volume of Bitcoin is decreasing on exchanges due to the decision of users to store their assets more securely. One way or another, storing cryptocurrency on exchanges is unsafe. But I suppose it is worth paying attention to the fact that according to statistics, there has always been a significant increase in the volume of bitcoin on the exchanges before the fall in prices, as well as in the opposite direction, withdrawing Bitcoin to safer wallets to Hold before a bull run. At least this version gives ground for thought and encourages about the near future.

[exstasie]

In a general sense, any insolvency (whether from a hack, or from a margin lending default as seen on Poloniex, Okcoin, Huobi, etc.) would be expected to bring socialized losses. I guess I was just referring to the "socialise losses whenever there's a bad crash or liquidity wipe" bit, which is more specifically a leverage issue. To put it one more way: if you want to be insulated from crash-related socialized losses, stay away from exchanges that offer leverage!

While this is technically true, going forward, with improved operations from exchanges and above all improved liquidity on the market, the event of the default of a market participant are expected to diminish significatively. Hence reducing the need to "socialise losses" in the first place. At least, this is what I am expecting.

That's certainly the hope, that liquidity will improve, but at the very least I think Bitcoin's scarcity lends itself to an illiquid ask side on the spot market. That encourages high volatility, which in turn encourages a thinner bid side. Pegged derivatives markets should react accordingly. Of course, regulated markets already react to this sort of thing with circuit breakers.

I also think we're a very long way off from some future where BTC isn't treated as a highly speculative risk asset, and where volatility and liquidity could mirror that of more traditional assets. The exchange and derivatives sector, from a functional point of view, looks extremely similar to 2017. Illiquid as hell.

[daarul50]

Not to mention that exchanges have been known to socialise losses whenever there's a bad crash or liquidity wipe -- thereby literally reducing the account balance you have on Bitcoin. Can't recall the exact names but we've had some big names in the space in past few years do this.

They all fear "bank runs" because when it comes to it, I dread to think how many exchanges actually have enough in their wallets to honour every single withdrawal.

Correct perhaps they are realized how dangerous storing coins on an exchange
Everybody seems had educated themselves in 2020 as they learned how to store coins properly not by buying and let there.
This is a mix between people has had an improvement security awareness and the bull run prep.
Still not sure but there is no harm to believe people are allin to bitcoin after desperate on the bubble property right?

[FlightyPouch]

may i know the reason why holding or transferring bitcoins to personal wallet is a good reason? does it have any good effect to the current price of the bitcoin? i think if many people would hold their coins there would be a low trading volume in the market and this will result on slow change on the market and maybe slow progression of the bitcoin's price.

Well, we never know. As the earlier posts said, we never know what might happen since it is not the same as a traditional market. All I know in this matter is that people actually owns their bitcoins now since they are not holding it in an exchange. Maybe most of them just wants to hold it for a long time and do not want to trade it that quickly. I also don't know how the price will go from this.

[barbara44]

Nevertheless, there is a certain percentage of the likelihood that the volume of Bitcoin is decreasing on exchanges due to the decision of users to store their assets more securely. One way or another, storing cryptocurrency on exchanges is unsafe.

Yeah I had same thoughts; with the recent hacks and everything that has been happening, people must have felt that exchanges wouldn’t be a good choice for them to be storing their assets. From the start exchanges has never been a good place to store cryptocurrency assets, if you do and eventually the exchange gets hacked and is unable to pay back for what was lost, you will just lose your assets like that without compensation or whatsoever.

If you have plans to leave them on an exchange then it has to be an exchange that has insurance, that way you’re sure that your money is safe in case of such.

[SquallLeonhart]

If you have plans to leave them on an exchange then it has to be an exchange that has insurance, that way you’re sure that your money is safe in case of such.

The data supports the idea of price increasing because the moment when the bitcoin balance started to reduce in exchanges, we have started to see a bit of increase in the bitcoin price as well. It is just not that big of a deal, that is the problem. It did had some impact on the price and increased it a bit, but the main thing is bitcoin doesn't increase or decrease depending on just one thing, it does change however depending on multiple things and mainly from people making decisions on the price and reacting to it by buying or selling.

It means this was one portion of the result, but it wasn't the whole 100% of it. So the ones who say it was impactful are right a bit, and the ones who say it had nothing to do with it are right a bit as well, it both had an impact but a little one.

[Mehedi72]

Due to exchanges getting hacked, that may the reason people don't like to keep their bitcoin on exchanges. Recently the hacking of kucoin, may let them think about this.but I'm not satisfied about the graph cause i believe its not showing accurate things. possible that people withdraw their bitcoin from exchange and hodl those on their Blockchain wallet or cold wallet or others bitcoin wallet.so i don't think, need to take this matter seriously after seeing this graph

[KingsGambet19]

Part of keeping safe your money through bitcoin is not by keeping it to exchanges. It is natural for a bitcoin holder to withdraw bitcoins from.exchanges to store it in their personal bitcoin wallet for safe keeping. If it happen to be that mostly in most of exchanges that bitcoins users are keeping their bitcoin for holding purposes then high chance that bitcoin will take the bull run. We can be happy with that of course.