Bitcoin Investors are Getting Smarter : Exchanges Hits Lowest Level Since 2018

[memehunter]

Investors are buying Bitcoins but not holding them on exchanges, as we can see by the sharp decline in Bitcoin supply on exchanges. IMO, it clearly indicates that investors are not in the mood of selling their Bitcoins any time soon. It is also good that more and more people are using self-custodial options to hold Bitcoins, as Bitcoins stored in centralized exchanges are not aligned with the true philosophy of Bitcoin.
Below is the chart representing supply of Bitcoins in exchanges:

 

Source: https://news.bitcoin.com/bitcoin-on-exchanges-hits-lowest-level-since-november-2018/

[Apocollapse]

I believe there's a reason behind that.

The sudden fell in late 2022, FTX collapsed on November 2022.

The slowly fell in early 2024 till now, SEC approved Bitcoin ETFs in January 2024.

I don't see anything change with people around me, people who have cryptocurrency and these influencers, they're still using centralized exchanges to hold their coins. That's why I don't believe it was the retailers that getting smarter and care with their coins safeness.

[Oshosondy]

This is good but not enough. It would be good if there is more reduction in people's coin holding on exchanges. Exchanges are not for storing coins but for buying and selling coins. You buy or sell and then send the coins to a non-custodial wallet is the best. The only money that should remain on exchanges are the money that traders are using to trade and they should only leave it on exchanges when they are trading not when they are not trading. If they are not trading, they should also move the coins to a non-custodial wallet.

[stadus]

This shows one clear thing: investors are shifting towards long-term Bitcoin investments. For those who prefer not to hold their BTC in personal wallets, ETFs offer a safer alternative compared to exchanges. In terms of securiy, their robust security measures and insurance policies to cover potential losses, ETFs provide a sense of security. Though i agree with the saying, (“not your keys, not your Bitcoin”), not everyone has the technical know-how to keep their holdings secure. That’s why many opt to invest in highly regulated institutions like ETFs.

On another note, the presence of ETFs gives signals that investors are now more convinced of Bitcoin’s long-term potential as institutional investors are stepping in. Add to that Trump’s pro-Bitcoin comments, and the future of Bitcoin looks even more appealing for those considering it as a long-term hold.

[Die_empty]

Investors have started to have more confidence in Bitcoin and there has also been more awareness about the dangers of keeping coins in exchange. The fall of FTX might have played a significant role in the change of people's view of keeping coins in exchange. The investment of some big Bitcoin investors might have also contributed to this reduction. Some of them have large chunks of Bitcoin in their custody. Many small investors are also keeping their coins hoping that the price of Bitcoin will keep increasing until they get to right time to sell. My prediction is that there will be an increase in exchange activities early next year.         

[hugeblack]

It's good to hear this news especially since the price of exchanges can affect the price of Bitcoin but I thought the balance of those exchanges was much higher than 3 million Bitcoin. Generally it is rare to see the bankruptcy of large platforms in the emerging market and the problems start with the beginning of the price correction so I hope that the currencies will continue to be kept in the wallets and that the trading amounts will be sufficient.

[freedomgo]

The sudden fell in late 2022, FTX collapsed on November 2022.

I doubt that's the main reason. There have been many exchange hacks in the past, yet people still keep their precious Bitcoins in exchanges. Even with this hack in the past, there was news that investigators recovered enough funds to compensate affected users. The only downside? They didn’t get reimbursed in Bitcoin, so the value was much lower compared to when the hack happened.
FTX cleared to repay billions to customers after bankruptcy plan approval

So, IMO, the main reason here, is the ETF news, especially with BlackRock now holding over 200k bitcoins.

[hd49728]

Investors are buying Bitcoins but not holding them on exchanges, as we can see by the sharp decline in Bitcoin supply on exchanges. IMO, it clearly indicates that investors are not in the mood of selling their Bitcoins any time soon. It is also good that more and more people are using self-custodial options to hold Bitcoins, as Bitcoins stored in centralized exchanges are not aligned with the true philosophy of Bitcoin.

The fiascos of Terra, FTX exchange, and some DeFi platforms, ventures in 2022 and 2023 actually affected people who have bitcoin and cryptocurrencies. From these fiascos, they understood more about the saying "It's not your private key, it's not your coin". When they more understood about the risk, they less likely want to store their coins on centralized exchanges, it's natural.

Bitcoin bull run in 2024 lifts its price to a very high level and it can affect people's capital management too. With experienced investors, Bitcoin is their main investment asset, but with newbies they will ignore Bitcoin and choose altcoins. With institutional investor increase since Bitcoin Spot ETF approvals in January, more bitcoins will be hold by these entities, and less bitcoins will be floated in retail investors.

[memehunter]

I believe there's a reason behind that.

The sudden fell in late 2022, FTX collapsed on November 2022.

The slowly fell in early 2024 till now, SEC approved Bitcoin ETFs in January 2024.

I don't see anything change with people around me, people who have cryptocurrency and these influencers, they're still using centralized exchanges to hold their coins. That's why I don't believe it was the retailers that getting smarter and care with their coins safeness.

You are right; investors are learning from past mistakes and scams. I also agree that institutional investors are the ones who are refraining more from using centralized exchanges to hold Bitcoins. I just like to add on that I do see people around me (retail investors) changing their attitude toward holding Bitcoins in exchanges as technical awareness around Bitcoin is increasing. People are feeling the power of truly owning money, as everyone here knows it is addictive. 

This is good but not enough. It would be good if there is more reduction in people's coin holding on exchanges.

Indeed we need more reduction as you said but I believe it is a starting of a paradigm shift.

For those who prefer not to hold their BTC in personal wallets, ETFs offer a safer alternative compared to exchanges. In terms of securiy, their robust security measures and insurance policies to cover potential losses, ETFs provide a sense of security. Though i agree with the saying, (“not your keys, not your Bitcoin”), not everyone has the technical know-how to keep their holdings secure. That’s why many opt to invest in highly regulated institutions like ETFs.

Nothing can match the security of owning your keys (as you mentioned). Investing in ETF is kind of the same in the sense of trusting a third party, which is the genesis of all major problems with the current fiat system. I am agreeing with you from the profit point of view, but philosophically, I prefer self-custody any day. 

Many small investors are also keeping their coins hoping that the price of Bitcoin will keep increasing until they get to right time to sell. My prediction is that there will be an increase in exchange activities early next year.         

I do not think so. IMO Bitcoin will shook the very foundation of centralized exchanges (as it was meant to be). We are entering in a new era of Bitcoin dominance which will open new possibilities.

It's good to hear this news especially since the price of exchanges can affect the price of Bitcoin but I thought the balance of those exchanges was much higher than 3 million Bitcoin. Generally it is rare to see the bankruptcy of large platforms in the emerging market and the problems start with the beginning of the price correction so I hope that the currencies will continue to be kept in the wallets and that the trading amounts will be sufficient.

True! It can lead to volatile price action on exchanges. Even I was expecting it to be significantly higher then 3 million.
Though bankruptcy might be rare but exit scams are not so rare

 

[Kelward]

This is good but not enough. It would be good if there is more reduction in people's coin holding on exchanges. Exchanges are not for storing coins but for buying and selling coins. You buy or sell and then send the coins to a non-custodial wallet is the best. The only money that should remain on exchanges are the money that traders are using to trade and they should only leave it on exchanges when they are trading not when they are not trading. If they are not trading, they should also move the coins to a non-custodial wallet.

Thanks for defining the basic services of exchanges, and I bet that many people that are not well knowledged about wallets are the ones that will keep their coins in exchanges. I believe that as the awareness about none custodial wallets increases, that most holders will understand that holding in exchanges is not the best option and it will further affect the volume of coins in their custody. One of the biggest lessons that I've learnt on this forum is "if it's not your keys it's not your coins,", if more holders knows this and abides by it, then exchanges will only be used as a third party in transactions.

[avp2306]

This is good but not enough. It would be good if there is more reduction in people's coin holding on exchanges. Exchanges are not for storing coins but for buying and selling coins. You buy or sell and then send the coins to a non-custodial wallet is the best. The only money that should remain on exchanges are the money that traders are using to trade and they should only leave it on exchanges when they are trading not when they are not trading. If they are not trading, they should also move the coins to a non-custodial wallet.

As long as there are so many people believe that storing their coins in exchange is the most convenient these numbers will never fade out. This should be came up on the mind of people that exchange is for buying and selling. But many still got caught on the idea that they can continuously earn if they trade their bitcoin that's why people choose to store their bitcoins at that platforms.

People need to know that once they let their coins stored in their exchange account there's huge possibilities that they might lose it for any unwanted circumstances. That's why its really better to take out their money there and left only those funds they can afford to lose or trade. To HODL using this exchange is the dumbest idea they do since we know its so risky to do this.

[michellee]

They now know how to secure their Bitcoin by not keeping their Bitcoin in the exchanges. They learned from what happens to the exchanges and they better keep Bitcoin in their wallet. That can gives them a way to fully monitor and guard of their Bitcoin and nothing to worry with a scam or losing their Bitcoin because of the third party. That is a good change that the investor doing with their Bitcoin and only use the capital they can afford in the exchanges to trade. If the exchanges get in a bad situation, the investor can still calm down because they don't leaves too big money in the exchanges and they can move on to the other exchanges that can makes them feels comfortable.

[TravelMug]

And this could be one positive offshoot of the FTX collapse, before we have heard a lot of traders or investors losing their money because they have left it in a exchange. We would forget the Quadriga: The cryptocurrency exchange that lost $135m. Founder was found dead in India in 2019, keeping with him all that money that those traders have left in that exchange. But still we didn't learn from our mistakes until SBF and his FTX collapses bringing down a billion dollar empire.

So it's good that at least investors now holds their private key and that they have total control of their Bitcoins.
And most likely they know that this is going to be the biggest bull run ever, so we better have the best security protocol, and that no one has accessed to it except us.

[examplens]

Investors are buying Bitcoins but not holding them on exchanges, as we can see by the sharp decline in Bitcoin supply on exchanges. IMO, it clearly indicates that investors are not in the mood of selling their Bitcoins any time soon. It is also good that more and more people are using self-custodial options to hold Bitcoins, as Bitcoins stored in centralized exchanges are not aligned with the true philosophy of Bitcoin.
Below is the chart representing supply of Bitcoins in exchanges:

The mantra "not your keys, not your coins" finally gives results.
After all the collapses like FTX, investors, especially newcomers, are much more cautious and suspicious. Which is good.
I assume that exchanges will have to raise their APY interest if they want to attract their users to keep their coins.

[icalical]

The declining Bitcoin supply on exchanges indeed reflects a shift toward self-custody, but it is not about "not selling." Recent data puts a big role on institutional adoption, such as ETF inflows. For example, Bitcoin ETFs have inflows of $950 million because of optimism about its gain in the future. With reduced exchange reserves, it signals bullish sentiment, but at the same time, liquidity tightens. That could increase volatility if leveraged traders and sudden spikes in demand join the mix. This is neither absolutely "good" nor absolutely "bad," but rather a sign of a maturing, complex market.

[Sanitough]

if we look at the chart carefully, it starts in 2024 where we see a major decline, and as reported ...

Data from CoinGlass shows exchanges experienced outflows of roughly 30,000 Bitcoin, valued at $2.7 billion, in the past week.

Over the last 30 days, outflows reached 85,000 Bitcoin, worth $7.6 billion.

Exchange-held Bitcoin has declined steadily since January, dropping from 2.72 million to 2.3 million Bitcoin, as investors move their holdings to private wallets for long-term storage.

On the flip side, this also boosts the overall holdings of the ETF market, so it’s safe to say that a big chunk of Bitcoin might eventually end up tied to ETFs. Meanwhile, some of it will still go to hard wallets, where long-term investors prefer to store their holdings.

The process of safeguarding Bitcoin through hard wallets has been around for a while, and many people already know how to do it. However, some find it complex and risky. Issues like losing the physical wallet or making user errors, such as mismanaging keys, can lead to losing funds. There’s also the risk of being hacked due to poor security practices.

For many, ETFs offer a simpler alternative with fewer personal risks, even though it sacrifices the decentralized and self-sovereign principles of Bitcoin. It all boils down to what level of control and security each investor is comfortable with.

[avikz]

The trend has surely started moving into the right direction but it has a long way to go, still!

I believe some previous instances are finally sinking into the investor's mind and they have also started realizing that "not your keys, not your Bitcoin" statement is very true! Good to see that a lot of investors are choosing to have their old cold storage for their bitcoin. Which also means, that a lot of investors are not willing to sell their Bitcoin right at this moment. They want to hold onto it for a longer period of time before thinking about selling the coins.

[$weetne$$]

Investors are buying Bitcoins but not holding them on exchanges, as we can see by the sharp decline in Bitcoin supply on exchanges. IMO, it clearly indicates that investors are not in the mood of selling their Bitcoins any time soon. It is also good that more and more people are using self-custodial options to hold Bitcoins, as Bitcoins stored in centralized exchanges are not aligned with the true philosophy of Bitcoin.

Many investors are still using centralized wallets for storing of their Bitcoin therefore, while the Bitcoin on exchanges are reducing, they are not going into non constodial wallets as we think but still centralized wallets because I see many custodial wallets get lots of download from the app store. Only very few people are making use of non constodial wallets. But it is a good news that exchange are not having that much Bitcoin again to use in manipulating the price of Bitcoin. Maybe as the culture continues to spread then we will have more people going decentralized and not relying on the centralized exchanges or wallets. The more people get enlighten about hodling, the lesser exchanges will have control of the market and that is a good sign of progress.

[nakamura12]

It's good for those people who didn't hold their bitcoin in an exchange and it's not good for those people who wants to accumulate bitcoin when exchanges have now low supply of bitcoin. Anyway, there's a reason as explained in the post above and it's also not really ideal to store bitcoin in an exchange. Did you know about not your keys not your coins?. That's also the reason why it's best not to store or hold your crypto in an exchange but to a self-custody crypto wallet.

[Franctoshi]

Investors are buying Bitcoins but not holding them on exchanges, as we can see by the sharp decline in Bitcoin supply on exchanges. IMO, it clearly indicates that investors are not in the mood of selling their Bitcoins any time soon. It is also good that more and more people are using self-custodial options to hold Bitcoins, as Bitcoins stored in centralized exchanges are not aligned with the true philosophy of Bitcoin.
Below is the chart representing supply of Bitcoins in exchanges:

 

Source: https://news.bitcoin.com/bitcoin-on-exchanges-hits-lowest-level-since-november-2018/

Aside from the fact that this indicates more number of investors interested in holding their Bitcoin and not willing to sell, but I guess FTX and Luna collapse must have thought investors a lot of lessons to hodl their coin in a decentralized wallets that no one wants fall victim again. Centralized exchanges are not to be trusted for storage of cryptos, but you can transact and do whatever business with them but put  your cryptos off exchanges.

when it comes to Guaranteed safety of your cryptos, self custody is the best way of storage.
Not your keys, not your cryptos.