15M BTC goes into self custody

[Husires]

according to Glassnode on-chain data analyzed by Cryptoslate, leaving less than 22% of all mined BTC moving around and exchanging hands.

These indicators show that investors are starting to withdraw their digital assets away from the exchanges, whether using wallets or other methods.
Indices measure the movement of currencies as a function of whether the transaction is in cold storage or in a hot wallet.

Think of illiquidity as the point when Bitcoin moves to a wallet that shows no spending history, while liquidity is when BTC moves to wallets that have a history of spending such as hot wallets and exchanges.

The chart above demonstrates the amount of highly liquid and liquid BTC assets and shows the figures are currently 3 million and 1.3 million coins respectively. The data is clear that both liquid and highly liquid supply have been trending downwards amidst the current market turmoil

Source: https://cryptoslate.com/research-2nd-december-the-15m-bitcoin-just-went-into-self-custody/


Is everyone beginning to understand Not your Keys, Not your coins , or is it temporary because of FTX?

[mk4]

Not surprising knowing that people got a bit too spooked by the FTX fiasco, and the fact that there are rumours about a lot of exchanges being potentially insolvent. I assume hardware wallet companies(Trezor/Ledger) have had a great time since the last few months.

Also, while this is great news, let's not forget that people can still just easily send back coins to exchanges once things settle down.

[skarais]

Is everyone beginning to understand Not your Keys, Not your coins , or is it temporary because of FTX?

They even noticed it before the FTX crash, but they believed in the exchange so much they didn't mind it. However, as far as FTX is concerned, there are many negative issues that may make them uncomfortable keeping their assets on the exchange so they choose to withdraw their assets to their respective wallets.

But as @mk4 says, these assets will be very easy to transfer back to the exchange when their holders start to trust the exchange again as before. For a while, the situation of centralized exchanges really lost a lot of holders as most of them withdrew their assets, but it will return to normal with time.

[pooya87]

Not surprising knowing that people got a bit too spooked by the FTX fiasco, and the fact that there are rumours about a lot of exchanges being potentially insolvent.

I believe the rumor part is the only reason why people are panic withdrawing their coins from centralized exchanges otherwise events similar to FTX have happened in the past and the users reaction weren't like this. But the fact that media and some "celebrities" got behind the story that others are also insolvent got them moving.

[zasad@]

I think that crypto users have already become smarter and do not store their assets on centralized exchanges or the minimum amount for trading. As a result of the recent bankruptcies of large crypto companies, many institutional investors and not individuals have suffered.

[pawanjain]

I personally think it's all temporary because of the recent FTX collapse. Since the collapse the voices about not your keys, not your coins are echoed everywhere.
The idea of using hardware wallets and non-custodial wallets are circulated almost everywhere which is why there's a sudden increase of withdrawals from exchanges.
People are afraid that the collapse of FTX can trigger other exchanges to collapse as well which is why there's a panic in the community to withdraw their coins from exchanges to their wallets.
Once the dust settles and bitcoin and altcoins spike up I am quite sure that people will send their coins back to exchanges to trade and take profits.

[BlackHatCoiner]

On-chain analysis leaves big room for mistakes. Don't take anything glassnode posts for granted, because there might be conflict of interest, and no way of proving their statements otherwise.

leaving less than 22% of all mined BTC moving around and exchanging hands.

That doesn't mean 22% of the circulation is at custodial exchanges, though. It just means that the 78% is held untouched (not necessarily cold storage either). A fraction of that 22% is likely to be stored at exchanges.

[tranthidung]

I believe the rumor part is the only reason why people are panic withdrawing their coins from centralized exchanges otherwise events similar to FTX have happened in the past and the users reaction weren't like this. But the fact that media and some "celebrities" got behind the story that others are also insolvent got them moving.

Rumor, level of total capital evaporated in FTX collapse and the very short time of the exchange collapse make people superb panic.

I could be wrong because I did not experience past collapses (I only join cryptocurrency market in 2017) but for me, this collapse makes some records for fastest collapse within 2 days and total capital lost on FTX itself as well as impacts on some related cryptocurrency companies in FTX network.

People don't change and they will send their coins to exchanges again when panic gone.

[Iroh]

Yes, I do agree that people got scared cause of the recent FTX drama and the rumors and downright misinformation floating around. And yes, hardware wallets companies have had good business for the past few months.
I also think that sadly, people would go back to being comfortable to putting their funds on exchanges when all of this nonsense dies down. Hopefully, people would more sensible that exchanges are no good for holding and storing your funds

[Maidak]

It looks like this happened right after we heard about the FTX crash, so there was no need to wait until today to find out about it. But the next question is whether we and the investors will leave centralized exchanges forever or temporarily stop using them for the time being. We all know using CEX is risky but we won't need it anymore. I really doubt it, I predict that we will soon forget what FTX did, and we will soon rush to the exchanges when the bull season comes. Just one season of bulls can heal all wounds, investors will quickly forget the pain once they make a profit.

[franky1]

OPs description of liquid vs illiquid is in correct

a measure of addresses that are 'use once' vs 're-use' is not a factor of showing whats an exchange and whats a users self custody. nor is it a sign of liquidity

there are many users that do "re-use" and
many exchange do "use once" cold wallet

EG say an exchange has a 10k btc haul
when its time to break the haul to supply a hot wallet with 1k coin. they put the 'change' into a new address

an easier estimate.
is usually the "bitcoin richlist"
the top 3 categories
[100,000 - 1,000,000)   793,314 BTC
[10,000 - 100,000)   2,262,241 BTC   
[1,000 - 10,000)   4,630,567 BTC   


are usually the hauls of large establishments/services. not individuals
lets compare that to the start of the year

[100,000 - 1,000,000)   672354
[10,000 - 100,000)   2072651
[1,000 - 10,000)   5177623

which is a total of
Jan:  7922628
now: 7686122
which is a 3% decline of coins in large hauled addresses

its only an estimate. but based on the brackets from the start of the year to the end of the year.

there is less coins in cold wallets(top 2 categories) and more coins in hot wallets/those with access to upto 10k coins per address

[OgNasty]

It is a great development.  It's only half the battle though.  While this will protect the purchasers of BTC who move it off chain, it doesn't stop the exchanges from selling fake paper Bitcoin to their customers.  FTX for example, was taking people's money and telling them that they owned BTC, then spending that money on shitcoins to inflate to the moon in order to take loans against them.  Sam has even stupidly said that this sort of action is why the BTC price was so high.  I think he's an idiot and completely wrong.  Had exchanges not been selling fake Bitcoin and steering people's money into shitcoins, Bitcoin likely would have seen a much higher peak in price that was more in line with the 4 year top cycle.

[Darker45]

This is the silver lining of all the unpleasant things that are happening in the crypto industry right now. This must be good. But this is probably not exactly the same as people realizing the value of not your keys, not your coins. Much of this is probably panic withdrawals. When centralized exchanges and platforms are falling, including one that was too big to fail, people are afraid to keep their coins there. But where are they moving? How many are actually moving funds from a CEx or a lending platform to another custodial wallet? How many are moving funds from, say, Coinbase to another online wallet? How many ceased to stake their funds only to be moved to a closed-source wallet?

[Sarah Azhari]

Is everyone beginning to understand Not your Keys, Not your coins , or is it temporary because of FTX?

it's time for investor withdraw the money whatever news FTX or something, because when we look a year after halving, it is begin bearish and after investor bought at all, this is the time for them to keep hold it again on custody wallet until 2024. or maybe something bigger than FTX will happen next.

[taufik123]

it's time for investor withdraw the money whatever news FTX or something, because when we look a year after halving, it is begin bearish and after investor bought at all, this is the time for them to keep hold it again on custody wallet until 2024. or maybe something bigger than FTX will happen next.

and before the halving, it will be the peak that everyone is waiting for because the bull market will come soon before the halving.
But holding in a custodial wallet until 2024 may not be a matter of time but keeping in a custodial wallet will be the safest way than entrusting in a centralized exchange.

Currently, centralized exchanges are starting to be shunned by investors and as explained by the OP Investors have begun withdrawing their assets from centralized Exchanges after the FTC collapsed and harmed many people.

The event of the collapse of FTX with very many losses will be a dark history for crypto, but when compared to Mt.Gox and referring to the years in its heyday, the event of the collapse of Mt.Gox is still more significant because almost 50% of the crypto market was controlled by Mt.Gox at the time that.

-snip- Mt.Gox operated from 2011 to 2014 and managed to control 46% of the crypto market from 2010 to 2014 because nothing was as popular as Mt.Gox anymore. and FTX controls only 13% of the crypto market from 2019 to 2022.-snip-

[DapanasFruit]

I am sure many people in crypto are now learning the many big risks associated with trusting centralized platforms especially if you are into one that is not pro-active in terms of transparency and management matters - well just like the incredible Sam Bankman Fried who pretended as someone we can trust and who has not yet admitted that he committed big frauds with the exchange he founded. This can be bias on my part but trusting people in crypto who are still young can be more risky - this is just my opinion. We have to make sure that we have the custody of our crypto funds and remember always that if we don't have the keys then we never have the control over anything.

[yhiaali3]

This is normal after the recent unfortunate incidents in the crypto market, especially the bankruptcy of FTX and then the bankruptcy of BlockFi. People started to worry about their money, so everyone started transferring bitcoins to their safe wallets, but I expect that when the market rebounds again, speculators will start returning to the exchanges because they need to Do the trading and get some profit. But I hope they learn powerful lessons from these.
As for Holders, in fact, they were not affected by all these incidents, and they will leave their money safe in their wallets as it was until they see a new peak for Bitcoin.

[pooya87]

People don't change and they will send their coins to exchanges again when panic gone.

Yeah, unfortunately that is true. Most people don't want to learn and while centralized exchanges are losing "volume" in short term, after a little while (maybe 2 or 3 months from now) everything will go back to "normal" and they all re-deposit their coins on the same exchange forgetting what happened today!

[taufik123]

People don't change and they will send their coins to exchanges again when panic gone.

Yeah, unfortunately that is true. Most people don't want to learn and while centralized exchanges are losing "volume" in short term, after a little while (maybe 2 or 3 months from now) everything will go back to "normal" and they all re-deposit their coins on the same exchange forgetting what happened today!

Back to normal but not how it was before the collapse occurred. The volume increases simply because those who don't want to learn from their mistakes start to go back in and forget what happened, which makes a lot of losses.

But will you follow a system like LUNA, even though they are back with a snapshot update by changing LUNA classic to LUNA (new) but the price will still not return to normal?

Normal conditions only apply to coins that are not heavily impacted by the FTX crash event.
In my opinion, the same exchange as FTX will no longer be in demand and will be blacklisted even though it is still operating.

[Husires]

Yeah, unfortunately that is true. Most people don't want to learn and while centralized exchanges are losing "volume" in short term, after a little while (maybe 2 or 3 months from now) everything will go back to "normal" and they all re-deposit their coins on the same exchange forgetting what happened today!

I do not think so. Based on this chat, it seems that the price is what controls the morale of individuals more than technical problems or hackers, which is logical. When the price increases, more people rush to sell.

It does not seem that we will witness high fluctuations in the price, so it is safe to say that the current rates will remain without much change for the next year, but after two years or more, most of us will forget what happened and the same patterns will be repeated.