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Crypto Investors Move to Self-Custody Services Amid Regulatory Pressure and Fear of Hacks

Goldman Sachs Reports Bitcoin and Ethereum Supply on Centralized Exchanges Drops Significantly in June

Jul 05, 2023
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The firm reported that the total monthly Bitcoin inflows from miners to centralized exchanges nearly doubled from May to $99 million in June.

A new report from global investment firm Goldman Sachs Group Inc shows that the supply of Bitcoin and Ethereum on centralized exchanges decreased significantly in June as holders moved to self-custody services due to regulatory crackdowns the growing crypto regulatory pressure and the heightened fear of losing funds to hackers.

The report also stated that Bitcoin and Ether supply on CEX reached their lowest levels this year. Bitcoin supply fell 4 percent, approaching the level of December 2022, while Ether supply dropped 5.8 percent in June to levels last seen in May 2018. For Ethereum, many holders chose to stake and earn passive income while storing their coins securely rather than keeping them on centralized exchanges. Additionally, the increased risks of hacks and scams on centralized crypto platforms reinforced the old adage 'not your keys, not your coins'.

Interestingly, crypto investors maintained and increased their holdings in recent months despite the prices indicating overbought conditions. In June, Bitcoin led altcoins in gains following an ETF frenzy from institutional investors. Even though the SEC has not yet approved the first Bitcoin ETF in the United States, the underlying crypto demand by institutional investors is evident. So investors remain highly optimistic about Bitcoin and Ethereum in the long term, especially with the growing institutional crypto demand.

As Bitcoin price rallied towards $31k last month, miners increased their profit taking, possibly driven by the fear of a potential correction. Specifically, Goldman Sachs reported that the total monthly Bitcoin inflows from miners to centralized exchanges almost doubled from May to $99 million in June.

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