The bear market has inspired the little guy to accumulate vast amounts of Bitcoin (BTC). The number of wallets holding 1 BTC or more recently hit new highs while those with 10 BTC or less are setting accumulation records.
However, to what extent are these newly minted “wholecoiners” taking custody of their private keys? Has the recent spate of insolvency among centralized exchanges (CEX) encouraged Bitcoin enthusiasts to move their Bitcoin into cold storage, removed from third party risk?
For Checkmate, lead analyst at Glassnode, the data would point to this result. Checkmate told Cointelegraph, “Overall looks like, at least a short-term, movement towards self-custody. Partly out of concern for CEX solvency.”
“Last few weeks have been the largest monthly decline in exchange balances in history, peaking at 177.9k BTC/month in withdrawal volume.”
He also shared that withdrawals from exchanges have made new records, as users have taken thousands of Bitcoin from exchanges. The spike is shown in red on the graph.
Customers withdrawing Bitcoin from exchanges has impacted exchange supply. The number of Bitcoin available on exchanges has “fallen to its lowest % of supply (11.99%) since Dec 2017. This means pretty much every coin that flowed in over the last 12 months, has flowed out,” Checkmate observed.
Plus, according to Glassnode data, withdrawals from exchanges accounted “for ~30% of all transactions in recent weeks.” The data would suggest an overall shift to self-custody: Bitcoin is being sent to hot or cold wallets.
When Bitcoin investors “withdraw” from exchanges, it can be to an offline hardware wallet, sometimes called cold storage, or an online wallet (hot). Hardware wallets or signing devices are tools that manage a user’s cryptocurrency wallet and private keys. Popular hardware wallets include Ledger, Trezor and ColdCard; hot wallets include Blue Wallet or Exodus Wallet.
Josef Tětek, Bitcoin analyst at Trezor, one of the world’s largest hardware wallet providers has observed a considerable drive in sales in the past mont. Tětek told Cointelegraph, “We have seen a dramatic rise in interest in Trezor devices and new Trezor Suite downloads. Our sales are hitting historic highs over the past few weeks.”
“Normally, a bear market is rather a quiet period for us, so this uplift in sales only shows how big of an impact the collapses of FTX and BlockFi have on people’s trust in custodian services.”
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