Bitcoin Reserves on Exchanges at Six-Year Low, Driven Partially by Binance Outflows

By: Eliza Bennet

The amount of Bitcoin being held on cryptocurrency exchanges has reached a year-to-date low, hitting around 11.8% of the total available supply, a figure comparable to reserve levels last seen six years ago. Exchanges such as Binance, Coinbase, and Kraken are seeing Bitcoin balances decline, with the largest reduction in holdings seen on Binance. Over the past month, approximately 30,000 Bitcoins have reportedly been withdrawn from the platform.

Typically, Bitcoin outflows from exchanges may indicate a long-term holding strategy by investors. It is thought that this recent shift could be an indication of a possible change in investor sentiment, signalling that they are preparing for an upward shift in the cryptocurrency's price point. However, current regulatory environments may also be influencing this move as traders prefer to secure control of their coins. The continued contraction of Bitcoin reserves on exchanges also comes in amongst increased scrutiny from regulatory bodies like the United States Securities and Exchange Commission (SEC).

The SEC has been particularly stringent on Binance and Coinbase, accusing the exchanges of issuing unregistered securities, and this has possibly contributed to the decrease in Bitcoin reserves on these platforms. This scrutiny has led to operational disruptions, major staff resignations and layoffs in exchange platforms especially in Binance US, where trading volume is now reportedly down by over 95%.