The number of BTC held on crypto exchanges has recorded a 20% drop over the past 12 months, according to data provided by Glassnode.
In particular, it looks like investors are withdrawing their assets from trading platforms into cold storage.
Traders tend to keep their cryptocurrencies on exchanges when they plan to trade them with some frequency. However, this comes with certain risks, as platforms can be hacked or simply shut down, resulting in users losing their assets.
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Now, it looks like traders are withdrawing their cryptocurrencies to much safer cold storage. However, this makes it clear that they do not intend to trade, at least not imminently, as they would first have to transfer them back to a trading platform to do so.
This massive withdrawal of funds has resulted in a supply crisis on exchanges.
In addition, the company's "Hodlwaves" metric, which measures the time elapsed since coins are last moved on the chain, also suggests an increase in accumulation activity. Hodlwaves data released on February 22 shows 57% of the Bitcoin supply has not moved in more than a year.
However, the decline in the amount of Bitcoins held on centralized exchanges may also be due to the increasing popularity of decentralized exchanges and DeFi yield protocols.