The decline in the percentage of Bitcoin held across exchange addresses to a current value of 11.7% (2.27M BTC) carries several implications. Firstly, it indicates a shift in the behavior and sentiment of Bitcoin holders since the COVID-19 crisis. The numbers have actually decreased by 11.7% to 2.27 million BTC, which is the lowest since December 21st, 2017.
Following the COVID-19 Crisis, the percentage of #Bitcoin held across Exchange addresses has been in perpetual decline, dwindling to a current value of 11.7% (2.27M BTC), the lowest recording since Dec-21-2017. pic.twitter.com/HlLwzYwcuJ
— glassnode (@glassnode) June 26, 2023
The COVID-19 crisis, which began in early 2020, caused significant uncertainty and volatility in financial markets worldwide. During periods of economic instability, individuals and institutions tend to seek the safety of stable assets, such as Bitcoin. As a result, the percentage of Bitcoin held on exchanges typically increases, as investors move their funds into exchanges for trading or as a precautionary measure.
However, the statement highlights that the percentage of Bitcoin held across exchange addresses has been in perpetual decline, reaching its lowest recording since December 21, 2017. This suggests that Bitcoin holders are becoming less inclined to keep their assets on exchanges and are potentially opting for other storage methods, such as personal wallets or custody solutions.
There are several reasons why this shift might be occurring. One possibility is that Bitcoin holders have gained more confidence in the security of personal wallets or custody solutions. With the development of improved hardware wallets and secure storage options, investors may feel more comfortable taking custody of their own Bitcoin rather than relying on exchanges, which have historically been susceptible to hacks and security breaches.
Additionally, the decline in the percentage of Bitcoin held on exchanges could reflect a growing trend of long-term investment strategies. Bitcoin has been increasingly viewed as a store of value or a hedge against inflation, similar to gold. Investors who adopt this perspective may choose to hold their Bitcoin for extended periods, rather than actively trading it on exchanges. Consequently, they would withdraw their Bitcoin from exchanges and store it in more secure and private wallets.
It’s worth noting that the decline in the percentage of Bitcoin held on exchanges does not necessarily imply a decrease in overall Bitcoin ownership or interest. Instead, it suggests a change in the distribution of Bitcoin holdings and a shift towards alternative storage methods. As a decentralized digital currency, Bitcoin offers individuals the ability to have full control over their funds, and the declining percentage of Bitcoin on exchanges aligns with this principle.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any service.
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