Bitcoin (BTC) and ether (ETH) supply on exchanges fell in June as rising regulation and crime prompted holders to favor self-custody, Goldman Sachs (GS) said Tuesday in a report citing on-chain data.
Supply of bitcoin, the largest cryptocurrency by market cap, fell 4% to approach December 2022 levels, the lowest since November 2020 — and just ahead of the start of the 2021 bull market, the report said. Ether supply fell 5.8% to levels not seen since May 2018.
This trend is underpinned by a number of factors, the bank said.
“Large centralized spot exchanges are facing regulatory headwinds that are putting investors on high alert. Cyber hacks and theft continue to be a problem in the crypto markets, underscoring asset holders’ penchant for self-custody, in keeping with the popular adage “Not your keys, not your coins” and specifically for Ether has the enabling of Withdrawals from staking ether have led investors to prefer staking ether over passively sticking with exchanges,” the report reads.
Goldman noted that June was a record month for bitcoin miners’ inventory sales as miners benefited from the cryptocurrency’s strong performance. Total monthly BTC inflows from miners to exchanges nearly doubled from May to $99 million, it said. Bitcoin price surged nearly 12%, TradingView data shows.
As transaction fees returned to normal in June after May’s network congestion, monthly address activity for Bitcoin and Ether rebounded, gaining 15.5% and 37.5%, respectively, the report added. Goldman noted that average daily ether consumption was down 65.1% month-on-month and average daily fees were down 63.3%.
The past month has also seen a surge in new on-chain activity, with the daily average number of new addresses for bitcoin and ether increasing by 9.8% and 48.2%, respectively, compared to the previous month, the note said.
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