In the realms of cryptocurrency, changes in the balances of Bitcoin (BTC) and Ether (ETH) held on exchanges can signal a shift in broader market sentiment. Goldman Sachs’s recent analysis of on-chain data indicates a substantial decrease in the amount of both BTC and ETH held on exchanges during June – a move that seemingly speaks to the growing preference among crypto holders for self-custody. This growing trend raises questions about its impact on the sector and its future.
One reason for this shift toward self-custody could be the prevalent uncertainty about potential regulatory actions against cryptocurrencies, combined with concerns about security breaches and asset thefts at exchanges. Moreover, now that ETH holders have the option to stake their tokens using self-custodial solutions, the incentives to remove assets from exchanges have grown. Consequently, exchange supplies of both BTC and ETH have significantly decreased, hitting lows not seen since December 2022 and May 2018, respectively.
June saw another intriguing development with BTC, namely a notable increase in miners selling their inventory, marking a record month for such sales. Encouraged by BTC’s robust performance, miners nearly doubled their monthly BTC transfers to exchanges, totalling $99 million. This uptick in miner sales accompanied Bitcoin’s price boost, concluding the month at a valuation of $30,472.
As for transaction fees, June saw a moderate return to normalcy. Following the network congestion experienced in May, BTC and ETH witnessed renewed monthly address activity, evidencing signs of recovery and progress.
Goldman Sachs detected a corresponding decrease of 65.1% in average daily ether burnt and a 63.3% drop in average daily fees, revealing a monthly trend of diminishing expenses. Meanwhile, the report highlighted a surge in new on-chain activity, with Bitcoin’s and Ether’s daily average count of new addresses increasing by 9.8% and 48.2%, respectively, compared to the previous month.
Encoded in this complex matrix of lower exchange supplies, rising on-chain activity, and falling transaction fees, is a cryptic message for the future direction of the market. Market observers might well interpret these data as early indications of a returning bullish landscape. Although caution is warranted considering uncertainties, these shifts could denote a transition in the crypto world, further reinforcing the shifting power from exchanges to self-custody.
Source: Cryptonews
