Exchanges have been eating up more and more of Bitcoin’s circulating supply, now accounting for 6.7% of all HODLers. The trend has been accelerating since 2017.
It’s no secret that cryptocurrency exchanges are some of the most influential entities in this industry. Not only do they provide liquidity, but they also set the playing field for the entire market. However, exchanges are also some of the biggest Bitcoin holders in the entire market — and the percentage of their holdings per Bitcoin’s circulating supply is only getting larger.
According to TokenAnalyst (@thetokenistanalyst), exchanges are by far the biggest HODLers in the entire cryptocurrency market. Approximately, 6.7% of all BTC in circulation is held by exchanges. That’s around $9.8B worth of Bitcoin.
Exchanges are the biggest #HODLers 💼
6.7% (~$9.8B) of all #BTC in circulation is currently held on exchange wallets
Through price rallies & crashes, we see that the stockpile of $BTC on exchange wallets has consistently been increasing.
— TokenAnalyst (@thetokenanalyst) October 8, 2019
What’s interesting to note is that with each major price crash for Bitcoin, exchanges have increased their holdings. For example, the 2018 bear market saw exchanges continue to expand their BTC storage. Currently, exchanges have more BTC than they have ever had before as a percentage of circulating supply.
Huobi, Binance, and Bitfinex seem to be leading the pack with their share increasing at an accelerating rate. It’s clear that these exchanges saw this as an opportunity to double-down on cheap BTC. It should be noted, however, that the chart presented by TokenAnalyst does not include Gemini or Coinbase, each of which have sizeable cold storages of not just Bitcoin, but many other cryptocurrencies.
Now, there is the nagging question of whether exchanges holding so much BTC is even a good thing. Do we want centralized entities controlling such a large part of the circulating supply? As a result, exchanges are safer now than ever before. However, it rests on the exchanges themselves to ensure that the cryptocurrencies they hold are not stored in a single point of failure. Exchanges holding more BTC is not a bad thing — what matters is that they have the right security in place to prevent a possible catastrophe.
What do you think of these numbers? Do you find this to be a liability for the cryptocurrency space? Let us know your thoughts in the comments below.
Images courtesy of Twitter.