According to CryptoQuant statistics published on September 20, the amount of Bitcoin (BTC) owned by top crypto exchanges including Coinbase, Binance, and Kraken is close to a six-year low.
After registering significant losses in the majority of August and the first half of September, the market as a whole stabilized, which coincided with the contraction. BTC prices are still below $30,000 as of September 20 after significant sideways movement in recent weeks.
— NEAR Protocol (@NEARProtocol) September 14, 2023
Bitcoin Reserves On Exchanges Falling
Exchanges control 2.09 million BTC at writing time, according to trackers. The Bitcoin network will produce 21 million coins altogether.
— Vinh Dao (@vinhdao286) September 21, 2023
However, as of 2023, there are over 19.7 million in use, and public companies like Tesla, an electric car manufacturer, and MicroStrategy, a business analytics company, have been stocking up. Cryptocurrencies can typically be held by entities in non-custodial wallets or exchanges like Binance or Coinbase.
Users can store their currencies in custodial wallets provided by exchanges in order to trade or even hold onto them. Users with coins on exchanges can quickly trade them for USDT or other cryptocurrencies. As previously indicated, despite appearing to be optimistic on the surface, the decrease in the quantity of coins held in exchanges does not guarantee a price increase.
Coin withdrawals from exchanges typically indicate a firming market and the likelihood of price growth. As anxiety sets in, however, traders and Bitcoin owners could opt to take control of their coins given the existing regulatory environment.
As a result, more users secure their funds in non-custodial wallets as a precaution, which could be the cause of the declining Bitcoin exchange reserves.
SEC, Regulators Tough On Exchanges
The amount of Bitcoin held on exchanges has been declining throughout 2022, but it seems like the decline accelerated in the latter half of the year. Around that time, FTX, a well-known cryptocurrency exchange, went under, locking in client funds worth billions of dollars.
Following the failure of certain regional banks in the United States, outflow slowed down in Q1 2023, but it has since resumed its downward trend. The decline can be linked to the bear market, but mostly because Binance and Coinbase are under fire from the US Securities and Exchange Commission (SEC) for alleged compliance violations.
i think Binance US has a good chance of survival if they can play by the SEC's rules. But if they keep getting in trouble with regulators, it's going to be tough.
— BuzzBeatHQ 🚀 (@mely_buzz) September 17, 2023
The SEC filed a lawsuit against Binance and Coinbase in June. The regulator stated that Cardano (ADA) and other unregistered securities were being issued by the two exchanges.
Binance US became the focus of this crackdown. Major personnel resignations, firings, and operations disruptions have occurred since then. Today, Binance US’s trading volume has decreased by more than 95%.
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