Bitcoin exchange outflows surge as ‘not your keys, not your crypto' comes back into fashion
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Loading... - Jenab Chan
- 06 Jul 2022
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Bear markets in cryptocurrency are known to be painful, but the month of June was especially trying for the crypto faithful as a confluence of factors resulted in the price of Bitcoin (BTC) falling 37.9%, its worst monthly performance since 2011.
As a result of the continued widespread weakness, a majority of the so-called Bitcoin “tourists” have now exited the space, leaving only the most dedicated holders remaining, according to blockchain analytics firm Glassnode.
Despite Bitcoin’s ongoing struggles and the fact that crypto traders are currently experiencing the worst bear market in the sector’s history, several metrics suggest that the outlook isn’t as dire as some are predicting and that the hodler base of the crypto market remains strong.
Dedicated hodlers increase in number
A significant purge of active Bitcoin wallets is a common occurrence during major sell-off events as well as in early bear markets, according to Glassnode. However, the severity of the exodus has been diminishing since the bear market of 2018, indicating that “there is an increasing level of resolve amongst the average Bitcoin participant,” Glassnode said.
During the most recent reduction in the number of addresses with a non-zero balance, only 1% of the Bitcoin addresses purged their holdings entirely as compared to 2.8% between April and May 2021, and the whopping 24% that did the same between January to March of 2018.
While on-chain activity for Bitcoin remains muted and solidly in bear-market territory, the most dedicated Bitcoin holders continue to hold the line and will likely continue to do so until the market turmoil subsides and a floor in the BTC price is established.
A return to best Bitcoin practices
The ethos of “not your keys, not your crypto” is once again gaining traction in the crypto community as traders have been withdrawing their tokens from exchanges at a frantic pace. The collapse of the Terra ecosystem, the potential insolvency of Celsius and the implosion of Three Arrows Capital have all served as a stark reminder that crypto is intended to be stored in cold storage.
Since March 2020, the number of Bitcoin held on exchanges has declined from 3.15 million to 2.4 million. That’s a total outflow of 750,00 BTC, with 142,500 of that total occurring in the past three months.
With platforms like Celsius halting withdrawals and smaller exchanges beginning to put limits on the amount that users can remove, the desire to regain personal control of crypto assets has become a top concern for holders.
This can actually be seen as a positive for prices in the long term as the likelihood of further capitulation decreases when tokens are locked in cold storage and not readily available to sell on exchanges. Read More...
