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Bitcoin’s (BTC-USD) supply on cryptocurrency exchanges has dropped to its lowest level since February 2018 as heightened regulatory scrutiny of the space seemingly drives traders to move their BTC to self-custody, according to on-chain data from market intelligence platform Santiment.
Some 6.4% of bitcoin (BTC-USD) supply left exchanges after the U.S. Securities and Exchange Commission sued Coinbase Global (COIN) and Binance, accusing the major exchanges of offering unregistered securities.
Supply has been pulling back since the 16.0% peak in 2020, the data showed, suggesting that traders feel more comfortable holding their bitcoins (BTC-USD) in self-custody wallets, which allow users to store their tokens and act as their own banker instead of relying on off-chain exchanges.
“As long as these #SEC lawsuits loom, this trend should continue,” Santiment wrote in a Twitter post Tuesday evening.
The multibillion-dollar demise of Sam Bankman-Fried’s FTX (FTT-USD) exchange late last year, as well as other high-profile meltdowns, likely helped to boost the popularity of self-custody wallets.
Meantime, in its first-quarter financial results published last month, Coinbase (COIN) saw its average assets under custody jump 25% to $52.3B from the prior quarter.
