Bitcoin Supply on Exchanges Falls to Lowest Levels Since December 2017

Bitcoin briefly reached 38,400 dollars yesterday but pulled back to around 38,000 dollars. As the price of the largest cryptocurrency rose, it appears that the supply on exchanges is decreasing.

This reduction is attributed by some to significant regulatory measures facing centralized crypto exchanges, which were once major industry leaders and key in providing liquidity and global accessibility to the industry.

Declining Bitcoin Supply on Exchanges

According to the latest analysis from Santiment, the supply of Bitcoin on exchanges is consistently shifting towards self-custody, coinciding with a decline in the reputation of crypto companies.

The total supply of Bitcoin on exchanges has fallen to 5.38%, the lowest supply since December 2017. Such a trend can be considered optimistic as if demand increases while supply remains low, prices will rise. Investors also believe that Bitcoin is poised for greater gains as the regulatory hurdles facing centralized crypto exchanges intensify and are eventually resolved.

The legal battle for Binance, for starters, is not over yet. The company recently paid 4.3 billion dollars to settle charges with U.S. authorities without admitting guilt.

The founder of Binance, who stepped down as CEO, Changpeng CZ Zhao, pleaded guilty to violating the Bank Secrecy Act and will have to remain in the U.S. until a Seattle court decides whether he should stay until sentencing in February or can return to the United Arab Emirates, where he holds citizenship.

Coinbase, on the other hand, has received a subpoena from the U.S. Commodity Futures Trading Commission (CFTC), which is speculated to be related to Bybit.

Tether Addresses on Exchanges on the Rise

The crypto analytics firm also revealed that the ten largest Tether wallets on exchanges hold a combined 15.23 billion dollars, thereby increasing the purchasing power of assets on exchanges to the highest level in 17 months.

The increase in cryptocurrency supply on exchanges could indicate a rise in selling activity within the sector, which could signal a bearish price trajectory. However, the focus is on the USDT metric, which is the most used and largest stablecoin by market capitalization, known for consistently maintaining its value pegged to the U.S. dollar, despite all criticisms and conspiracy theories.

Investors may choose to hold their assets in a stablecoin like USDT to protect them from the volatility typically associated with altcoins. A significant number of stablecoin holders view that asset as a safe haven, with plans to eventually re-enter the volatile crypto market. The act of purchasing assets like Bitcoin using Tether can naturally contribute to a positive impact on market prices.