Santiment, the crypto analytics platform, has reported that the amount of bitcoin held on digital asset exchanges has fallen below 6%, the lowest figure seen since December 2017. The loss of trust in centralized platforms was intensified after FTX, one of the leaders in its field prior to bankruptcy, while Binance has seen several bitcoin outflows in recent months, indicating a preference for self-custody over third-party custodians.
BTC Holders Keep Losing Confidence in Exchanges
According to Santiment’s analysis, the supply of bitcoin held on exchanges is at its lowest point in five and a half years at 5.84%. The rapid shift from custodians to self-custody methods began in 2022 and continued over the following months. A significant decline occurred after November last year when BTC held on centralized platforms dropped under 7%. The collapse of FTX was a major factor in investor trust in exchanges.
In December last year, Binance saw a large wave of customer withdrawals triggered by FUD. CEO Zhao maintains that his company will remain a stable custodian and suggests that people who have any doubts should transfer their stash to cold wallets.
Binance’s Recent BTC Outflows
Over 160,000 BTC (worth $4.6 billion at the time) was withdrawn from one of Binance’s wallets in what was described as its largest single withdrawal. Analyst Colin Wu suggested that the Binance cold wallet was internally adjusted to a new address, and the new address did not transfer out after receiving funds. The exchange temporarily suspended BTC withdrawals the day before due to network congestion but resumed normal operations shortly afterward. The exchange stopped transactions once again on May 8 because of a large volume of pending transactions but resolved the issue and thanked its users for their patience.