USD 20 Billion Worth of BTC Withdrawn from Exchanges to Self-Custody

USD 20 Billion Worth of BTC Withdrawn from Exchanges to Self-Custody 

Since September 1, 2020, an astonishing 804,000 Bitcoins, equivalent to a staggering USD 20.79 billion, have been moved away from centralized exchanges in the past three years. Notably, a substantial 184,000 BTC of that sum, valued at USD 4.75 billion, was withdrawn in the last three months alone.

Shift in Bitcoin Holdings Sparks New Self-Custody Trend

Centralized exchanges have undergone a significant shift in their Bitcoin (BTC) holdings over the past three years. According to data from Cryptoquant.com, on September 1, 2020, these trading platforms held a substantial 2.828 million BTC. Fast forward to the present day, and that number has declined to 2.024 million, marking a remarkable decrease of 804,000 BTC. While Bitcoin holdings on exchanges have consistently declined during this period, a significant decline was precipitated by the FTX bankruptcy event.

Before the filing of bankruptcy by FTX in November 2022, exchanges collectively held 2.511 million BTC, indicating a withdrawal of 487,000 BTC since then. In three months starting on May 23, 2023, approximately 184,000 BTC were moved out of centralized crypto exchanges. As of August 28, BTC holdings on these platforms teetered just above the 2 million mark, with data from cryptoquant.com reporting a balance of 2,007,427 BTC. In recent days, there has been a slight uptick, pushing the Bitcoin holdings to 2.024 million.

Data compiled as of September 2, 2023, reveals that Binance, the leading centralized trading platform in Bitcoin holdings, witnessed a withdrawal of 892.09 BTC over the last 30 days, while Coinbase saw 5,718.86 BTC exit its platform, as per coinglass.com metrics. Bitfinex experienced a loss of 429.02 BTC, and Okx saw 1,778.97 BTC being withdrawn. Among the top five exchanges, Gemini recorded a substantial outflow of 22,313.24 BTC from its reserves, and Bybit also registered a significant withdrawal of 30,673.34 BTC over the past month.

Self-Custodial Bitcoin Holdings Rise in Favor of Security and Control

The trend of withdrawing BTC from centralized exchanges underscores a growing preference for self-custodial Bitcoin (BTC) holdings. This approach provides users with complete control over their assets, mitigating the risks associated with exchange vulnerabilities such as hacks, potential insolvencies, or regulatory clampdowns. The collapse of FTX served as a stark reminder of these inherent risks, propelling the concept of self-custody into the spotlight. While the exact motivations behind these massive withdrawals remain uncertain, the benefits of self-custody are crystal clear.

What is your take on the significant shift in Bitcoin's movement away from centralized exchanges over the past three years? Please share your insights and opinions in the comments section below.