Bitcoin and Ether Holders Take Control: Exchange Supply Drops

• Bitcoin and Ether miners are not as reliable in sending tokens to exchanges per a Goldman Sachs report.
• The lack of interest possibly stems from growing regulatory scrutiny on exchanges.

Goldman Sachs Group Inc has highlighted in a new report a significant decline in the total monthly Bitcoin (BTC) and Ether (ETH) inflows from miners to Centralized Exchanges (CEXs) in June. Per the report, BTC supply dipped in June by 4%, nearing the level it recorded back in December 2022.

Notably, the December level can be tagged as a relatively lower point when compared to its level back in November 2020. Ether supply, on the other hand, plunged by 5.8% to levels last seen in May 2018

According to the report, Bitcoin inflows from miners to CEXs almost came in at $99 million in June.

From all indications, most BTC and ETH miners have chosen self-custody as a preferred option for their crypto assets. They have now taken to staking which enables the earning of passive returns while storing their assets.

This migration to self custody could be attributed to the crackdown on crypto exchanges by the United States Securities and Exchange Commission (SEC). The most recent of these crackdowns was the lawsuits filed against the duo of Binance and Coinbase for listing unregistered securities.

Sadly, these enforcement actions have impacted negatively on the broad crypto market as is seen with the supply of these two mega digital currencies.

Crypto Users Adopt Self-Custody for Bitcoin and Ether

Also, crypto users seem to have lost confidence in centralized exchanges owing to a growing number of attacks on different platforms. Crypto users do not intend to face the risks of hacks and rug pulls on their preferred CEXs considering the saying ‘not your keys, not your coins’.

Few days ago, leading Decentralized Finance (DeFi) platform Poly Network was exploited by hackers who manipulated the protocol to issue billions of numerous tokens including the dog-themed Shiba Inu (SHIB), Binance USD (BUSD), and Binance Coin (BNB).

Notably, this has not impacted the general interest in BTC or ETH, rather investors are now more bullish on both crypto assets. Crypto investors are filling their bags with more digital assets, especially with the recent embrace from institutional investors. Institutional demand for crypto mounted to a significant level in recent weeks after asset management firm BlackRock filed an application to list a spot Bitcoin Exchange Traded Fund (ETF).

As a large investment asset manager known for its impeccable reputation and status, BlackRock’s efforts to file its spot Bitcoin ETF application with the SEC ignited a great desire among other corporate asset managers. At the time of this writing, no spot BTC ETF has been approved by the SEC but the effect of the positive sentiment on the broader crypto market is undeniable.

In terms of on-chain activities, both crypto assets have been performing well and in June, the results were outstanding. The explosive Decentralized Finance (DeFi) development on Ethereum as well as the growing utilization of Bitcoin Ordinals Inscription dubbed BRC-20 standard are believed to have contributed to this increased on-chain activities.

The Goldman Sachs report also shows that BTC and ETH monthly address activity increased by approximately 15.5% and 37.5% respectively in June. Average daily Ethereum burn fell by 65.1% and average daily fees dropped by 63.3% on a month-on-month basis.

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