Crypto Investors Prefer Self-Custody Over Exchanges: $120M in BTC Withdrawn

• Around $120 million worth of Bitcoin (BTC) was withdrawn from crypto exchanges on Jan. 10.
• Roughly $50 million of the withdrawals came from Binance, while $30 million was pulled from Coinbase.
• Crypto investors favored self-custody over crypto exchanges due to FTX’s implosion and BTC’s illiquid supply in cold or hot storage wallets passing 15 million coins.

On January 10th, a significant amount of Bitcoin (BTC) was withdrawn from cryptocurrency exchanges. According to data from Glassnode, around $120 million worth of BTC was pulled from various exchanges. Of this amount, $50 million was withdrawn from Binance and $30 million from Coinbase.

This trend of more BTC outflows than inflows has been occurring since the beginning of the year, with the most significant inflow being around $80 million on January 4th. Despite this, exchanges have mostly seen more outflows than inflows on other days.

The reason for this shift in preference towards self-custody instead of exchanges is the collapse of FTX late last year. At the height of the FUD, Binance saw over $600 million in BTC withdrawn from its reserve in a single day, while Coinbase experienced BTC withdrawals of roughly $3.5 billion in November.

Due to this, the illiquid supply of BTC in cold or hot storage wallets passed 15 million coins, thus indicating that crypto investors are favoring self-custody over exchanges. However, this comes with its own risks, as a Bitcoin core developer recently lost 216 BTC due to a compromise.

It is clear that, despite the risks associated with it, the preference for self-custody over exchanges is still high. While exchanges are still the most popular way of buying and selling BTC, the trend of more outflows than inflows is indicative of a shift in investor preference. As such, it is important to understand the implications of this trend and the risks associated with it, in order to make more informed decisions.