The amount of Bitcoin being sent to self-custody wallets remains unmeasurable so far, which results in a substantial impact on the cryptocurrency market, according to the head of marketing at Santiment, Brian Quinlivan. As of mid-June, Bitcoin’s exchange supply reached its lowest point since February 2018, largely due to growing uncertainty around major exchanges such as Binance and Coinbase, ultimately leading to a significant increase in self-custody.
Self-custody tends to decrease circulation, leading to a reduction in the market capitalization tracked by websites like CoinGecko and CoinMarketCap. Quinlivan notes, however, that the increasing self-custody trend also comes with a downside in the form of stagnant coins, leading to lowered utility of the network as a whole. Nevertheless, as long as there is still a healthy amount of exchange activity, the negative impact of the current phenomenon should generally be offset.
Since March 2020, Bitcoin’s supply on exchanges has decreased from 16.1% to 9.8%, while prices have still risen by 283% during this time period. Unfortunately, it remains nearly impossible to determine the exact amount of BTC sitting on cold wallets, with Quinlivan stating that blockchain analysts can only give their best estimations.
Additionally, amidst the expanding self-custody trend, Bitcoin’s market capitalization continues to shrink. Since mid-April, its market value has dropped by over 15%, amounting to $494 billion at the time of writing. It is essential to consider both the potential rewards and risks associated with self-custody and the resulting impact on the market as a whole.
Source: Cointelegraph
