In June, Bitcoin and Ether supply on crypto exchanges fell by 4% and 5.8%, respectively.
According to a recent report from Goldman Sachs, June witnessed a noticeable decrease in the volume of Bitcoin (BTC) and Ether (ETH) held on cryptocurrency exchanges.
This trend is believed to be driven by increasing regulatory scrutiny, concerns about cyber security, and the growing preference for self-custody wallets among digital asset holders.
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The report highlights that Bitcoin supply on crypto exchanges fell by 4%, closely matching the levels of December 2022. Similarly, Ether supply dipped by 5.8%, reaching a low not experienced since May 2018.
Goldman Sachs identified several contributing factors for this trend. The bank's report stated:
Major centralized spot exchanges are facing regulatory headwinds putting investors on alert, cyber hacks and theft continue to be a concern across the crypto markets, highlighting asset holders’ preference for self custody, in line with the popular adage "not your keys, not your coins," and specifically for Ether, the enablement of staked Ether withdrawals has resulted in investors’ preference to stake Ether, instead of passively holding on exchanges.
The report also pointed out that June was a record-breaking month for Bitcoin miner inventory sales. Inflows from miners to crypto exchanges nearly doubled to $99 million. However, other sources claim that Bitcoin miners moved almost $130 million to crypto exchanges.
Notably, the aftermath of the network congestion experienced in May saw transaction fees return to standard rates in June. Thus, the monthly address activity for both Bitcoin and Ether increased by 15.5% and 37.5%, respectively.
Furthermore, new on-chain activities escalated last month, with the daily average new address count for Bitcoin and Ether rising by 9.8% and 48.2%, respectively, from the preceding month.
The decline in crypto exchange-held Bitcoin and Ether supply reflects the complex interplay of regulatory dynamics, security concerns, and evolving investor behavior. This shift in cryptocurrency custodianship further underlines the unique nature of this emerging asset class and the potential challenges and opportunities that lie ahead.
