The amount of Bitcoin held on exchanges has hit a five-year low.
Over the past month, $6 billion worth of Bitcoin has been withdrawn from centralized crypto exchanges.
The amount of Bitcoin stored on cryptocurrency exchanges has been decreasing for two years in a row. Why is this happening, and how much Bitcoin is left on trading platforms?
Since July 11, 2024, nearly $6 billion worth of Bitcoin, or 99,308 coins, has been withdrawn from centralized crypto exchanges (CEX), according to data from Bitcoin.com, citing the analytics firm CryptoQuant. The remaining Bitcoin stored on CEXs now totals 2.68 million BTC ($161 billion), the lowest level since November 2018.
This trend of declining Bitcoin reserves on exchanges has been observed since mid-2022. It coincided with the collapse of the FTX exchange, highlighting the growing interest among investors in non-custodial storage options for the leading cryptocurrency, according to Bitcoin.com.
FTX’s Collapse to Blame
The collapse of FTX was one of the largest fraud cases in cryptocurrency history. Sam Bankman-Fried, the founder of the company, was sentenced to 25 years in prison and fined $11 billion. He was previously found guilty of fraud, conspiracy, and money laundering.
Non-custodial wallets are crypto wallets that give users full control over their cryptocurrency, allowing them to manage the contents of their blockchain address at their discretion. Exchanges and services typically do not offer such features and instead hold their clients’ Bitcoin themselves.
Before the collapse of FTX, around 3.37 million BTC (over $200 billion) were stored on exchanges. As of August 12, this means that about 20% of all Bitcoin held on exchanges as of mid-2022 has been withdrawn.
This situation suggests that more users are prioritizing self-custody. As a result, crypto assets like Bitcoin are becoming less liquid on exchanges, which increases their scarcity and potentially strengthens their value over time, benefiting long-term holders.
How Much Bitcoin Is Stored on Exchanges
The largest cryptocurrency exchange by Bitcoin holdings is the U.S.-based Coinbase. As of August 12, it holds more than 840,000 BTC ($50 billion), according to Coinglass.
Next is Binance, with over 626,000 BTC ($37.4 billion) on its balance sheet. Bitfinex ranks third, with over 401,000 BTC ($24 billion) in its accounts.
Data on Bitcoin reserves on exchanges comes from official sources as well as on-chain analytics methods. Some of the most well-known crypto companies specializing in analyzing such data include Glassnode, Santiment, and CryptoQuant.
On-chain analytics refers to the analysis of data obtained from public blockchain networks like Bitcoin and Ethereum. Blockchain technology acts as an open ledger of information, containing the entire transaction history, allowing anyone with the know-how to "view" these transactions and draw their own conclusions from anywhere in the world at any time.
Researchers have begun using on-chain analytics to observe user transaction behavior, predict prices, and compare the data obtained with other sources for deeper analysis. This type of analysis is often used by law enforcement agencies and analytics companies to combat financial and other crimes.
The fourth spot in terms of reserve volume is shared by the U.S.-based Gemini exchange, Canada's Kraken, and OKX — collectively, these companies hold about 380,000 BTC ($22.7 billion).
