More and more Holders choose self-custody of cryptocurrencies instead of Centralized Exchanges
Despite the fact that the cryptocurrency market gradually improves over time, it is still quite evident that investors have not yet regained proper confidence. Cryptocurrencies are becoming increasingly volatile, and this volatility has led to heavy losses, especially in the past year. Cryptocurrencies have been in the green since the beginning of this year, but many have resorted to abandoning exchanges in favor of self-custody.
The main reasons for this change can be directly related to the setbacks suffered by the market for cryptocurrencies past year. Cryptocurrencies suffered a considerable drop in value early last year. The initial crypto winter was expected to last only a few weeks, but the situation changed in the blink of an eye. Investors had to face a large number of losses as a result of the endless nightmare. Another factor was the continued rise in interest rates by the Fed. These increases caused a sharp fall in the values of already affected cryptocurrencies. The Fed’s main objective was to steer the economy into recession.
Similarly, another reason that pushed investors to go self-custody was the collapse of FTX. Cryptocurrencies were hit hard as a result, and so were investors. Numerous companies declared bankruptcy and others considerably reduced their payroll. As for investors, many of them ended up with their funds immobilized on the exchange. When the exchange filed for bankruptcy, a cloud of uncertainty and pessimism hung over them. If this problem is taken into account, investors lost confidence in investing in cryptocurrencies. At the same time, it even gave rise to his desire to opt for self-custody wallets.
SELF-CUSTODY OF CRYPTOCURRENCIES IS INCREASING
One of the main reasons investors are going self-custody is the collapse of the FTX exchange. Considering the previous bottlenecks, investors are showing a feeling of paranoia and fear that something like the above incident could happen again. As a result, they prefer to play it safe by keeping their assets to themselves.
📉 The overall supply of #Bitcoin on exchanges has dropped from 11.85% to 6.65% over the past year, a historic drop that illustrates the rise in interest in self custody. #Binance, #Coinbase, #Kraken, #kucoinand #bitstamp all reflect this $BTC exodus. https://t.co/4GSJs29fOK pic.twitter.com/aDLuAw3oiU
—Santiment (@santimentfeed) January 18, 2023
Based on a tweet, it is quite easy to understand that the supply of BTC on a number of exchanges has dropped. Since last year, the offer has fallen from 11.85% to almost 6.65%. The considerable drop clearly shows how investors have moved towards self-custody. However, the change is expected to increase shortly.