Bitcoin balances on exchanges hit a two year low, holding 12% of all BTC in circulation

Bitcoin balances on crypto exchanges hit a two year low according to this total amount of Bitcoin on exchanges overview. The overview shows that Huobi and OKEx saw a decline over 1% in the past 24 hours. The total holdings of exchanges are currently 2,265,830 BTC, that is around 12.23 % of the total BTC in circulation.

It appears that users are beginning to withdraw their Bitcoins from custodial exchanges. BitMEX, Huobi and Bitfinex saw a reduction of more than 390,000 BTC from their custodial exchanges accounting for over 70% of the decline.

BitMEX and Huobi have been mired in controversies in recent weeks and this could be the reason for the withdrawal of Bitcoin assets from their custody.

However this trend is not a general one as while balances at BitMEX, Bitfinex and Huobi have reduced by more than half, Binance and Coinbase have continued to grow.

The latter are considered as the two biggest crypto exchanges in terms of volume and their relative stability has ensured that holders have confidence in their platforms.

Defi growth is a major reason for recent trends.

The DeFi boom has contributed to the reduction of Bitcoins on exchanges with more holders converting their Bitcoins to DeFi tokens. Also the recent popularity of wrapped Bitcoin tokens including wBTC and renBTC on Ethereum has led to more Bitcoins being converted to ERC20 tokens.

At the moment the amount of Bitcoins in wBTC and renBTC exceeds 130,000 which is impressive given that a few months ago the numbers were negligible.

Furthermore, institutional adoption of Bitcoin has risen in recent months. Grayscale has continued to add Bitcoins to its trust fund while other firms like MicroStrategy and Square have begun adding Bitcoin to their asset holdings.

These developments have caught the eye of the crypto community with some key influencers talking about this trend.

Industry Stakeholders believe trend will continue

Nexo co-founder Antoni Trenchev believes that this trend is due to the realization by the financial world of Bitcoin’s monetary policy.

 [People are] slowly are realizing what some of us have known for a while — BTC is the only sound monetary policy right now and you cannot afford to depart from the best performing asset of the decade.

Celsius co-founder Alex Mashinsky also thinks that these trends will continue unless exchanges begin offering better terms to customers.

As long as exchanges refuse to give their clients more they will leave them and come to Celsius. We just crossed $2.7B in deposits since launch two years ago. We would not be growing so fast unless we did more to our customers than exchanges.

It will be interesting to see how these trends develops as we move into a new era of decentralized finance.