Traders seem to be holding BTC as the price crumbles down. This outflow of funds could generate a lack of supply if demand increases.
For those users who own bitcoin, there are a lot of possibilities regarding the art of storing the cryptocurrency. Users are free to choose between saving their assets in a private wallet or an exchange depending on the use that each user makes of it. Currently, fewer and fewer bitcoin users are leaning towards using exchanges to store their assets.
In the past three years, users have never experienced such a lack of bitcoin in accounts rooted in exchanges. This information got detailed in a Glassnode study posted on the Reddit social network.
According to this data analytics company, the number of cryptocurrency units gathered in exchange houses is at least 2,500,000 BTC. This amount has not reached such a decayed point since November 2018.
In November 2018, the price of the cryptocurrency circled USD 6,000. As seen in that same study, the decay in bitcoin’s price in late 2018 and early 2019 unleashed an increase in exchange deposits. These movements may have represented traders that were ready to sell while taking advantage of the situation.
In 2019, the subsequent increase in the price deep-seated this trend of storing more funds on exchanges. The BTC in exchange houses ran from at least 2,700,000 to more than 2,900,000 until the end of October. Although this is not a clear factor, the storing in exchange houses could mean that traders were ready to sell or purchase back, merely depending on the fluctuations that they perceive in the bull market.
The Current Situation in Exchanges that Serve as a Store for Bitcoin
These days, bitcoin experienced a decrease in its price that has, in some ways, altered the usual behavior of traders and holders. With the price crumbling down, bitcoins seem to have entered an accumulation moment until the price reaches a new high again.
Another explanation is that fewer dollars are required to acquire a larger quantity of bitcoin. In this way, it is possible to withdraw a considerable amount of cryptocurrency from the exchanges with each investment.
Beyond the explanations linked to the struggles of the market, Reddit users spoke about the removal of bitcoins from exchanges, pointing out other reasons. One of the most prominent suggestions relates to mistrust towards this custody platform. When it comes to exchanges, the user is not the one who owns the private keys to gain access to the crypto assets but the company.
Why Would Users Withdraw Bitcoin from Exchanges?
This situation in which users find themselves one step away from losing it all has happened too many times. Some reports highlighted the ordeal experienced by dozens of Colombian traders; they had to deal with the blocking of their Binance accounts and were left without their savings.
A lot of countries are focusing on bitcoin and the activities linked to cryptocurrencies. When these actions take effect, the first entities that get asked for information about their users are the exchanges. Users do not want to depend on the actions of a company or the regulatory policies of a government to keep their funds safe.
By: Jenson Nuñez
