The Changing Landscape of Cryptocurrency Supply and Demand
According to a report by Goldman Sachs, the supply of bitcoin and ether on exchanges has decreased in recent months due to increased regulation and concerns over security. Here are the key points:
- Bitcoin supply on exchanges dropped 4%, approaching the lowest level since November 2020.
- Ether supply fell 5.8%, reaching levels not seen since May 2018.
- Regulatory pressures and cyber attacks have led investors to prefer self custody of their cryptocurrencies.
- Staked ether withdrawals have incentivized investors to stake their ether rather than hold it passively on exchanges.
- Bitcoin miners took advantage of the cryptocurrency’s strong performance, resulting in record inventory sales in June.
As transaction fees returned to normal in June, both bitcoin and ether saw an increase in address activity. Additionally, there was a rise in new on-chain activity for both cryptocurrencies.
Your Hot Take
The decrease in cryptocurrency supply on exchanges reflects a growing trend of investors seeking greater control and security over their digital assets. With regulatory uncertainties and the threat of cyber attacks, self custody and staking have become attractive options. This shift in behavior could have long-term implications for the cryptocurrency market and the role of centralized exchanges.
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