"They are not your keys, not your BTC" is a famous saying in the cryptocurrency space that it means that BTC on exchanges technically belongs to exchanges since they have the private keys to the funds. It seems that the saying has not discouraged BTC holders from using exchanges since 14% of BTC's circulating supply, amounting to more than 2.6 million tokens is currently in centralized exchange wallets.
The exchanges with the largest share of BTC include Coinbase, which owns approximately 954,000, Huobi with 364,000, and Binance with 267,000. This is from according to data published by the on-chain data analysis platform, Glassnode.
Exchanges contain significant amounts of BTC
Although the current wallet balance of 14% on the exchanges looks large, it is just what remains after BTC's massive exit from the exchanges earlier this year. After the third halving which happened in May, 70% of the BTC balance was withdrawn on the exchanges. The retreats were speculated to anticipate a bullfight as a result of the halving. Whatever the reason, this shows that the exchanges still contain a significant amount of the total circulating supply of BTC.
This number is expected to increase as miners recently started sending Bitcoin to exchanges again after the sell-off. According to Glassnode, the net flow of BTC from miners inside or outside their wallets reached its lowest level of -2,935 BTC since June 2019. This shows that miners have experienced the highest BTC outflow in the last year and have 97% of BTC sent to centralized wallets.
What this means for the price of Bitcoin
It is a trend in the Bitcoin market that miners who send Bitcoin to exchanges precede a bearish move for the cryptocurrency. This may explain why the asset has been unable to maintain an upward price movement towards $ 10,000 despite the increase earlier this week. Although the price is still holding above $ 9,000 now, cryptocurrency trader and analyst Josh Rager says it probably crumble to $ 8,500 soon.
If this is the case, it may be only a matter of time before retail investors also start sending their Bitcoin to exchanges as well. Will this cause a new fall or what will happen next?