The Amount of Bitcoin Withdrawn from Centralized Exchanges Reached Massive Levels in the Last 3 Years!

• Central exchanges have significantly fewer Bitcoin (BTC) holdings compared to three years ago. According to CryptoQuant data, as of September 1, 2020, trading platforms had 2.828 million BTC in reserves.
• FTX had 2.511 million BTC on exchanges before declaring bankruptcy in November 2022, indicating that 487,000 BTC has been withdrawn since then.
• The trend of withdrawing BTC from central exchanges highlights users’ preference for self-custody Bitcoin storage methods.

In the past 3 years, the amount of Bitcoin withdrawn from exchanges has exceeded 100,000, and there has been a significant increase in the amount withdrawn from exchanges in the past 3 months.

Hundreds of Thousands of BTC Withdrawn from Exchanges in the Past 3 Years

There has been a significant movement in Bitcoin ownership in the past three years. The 804,000 BTC withdrawn from central exchanges since September 1, 2020, represents an equivalent amount worth $20.79 billion. In particular, 184,000 BTC of this amount was withdrawn in just the past three months, worth $4.75 billion.

Central exchanges have significantly fewer Bitcoin (BTC) holdings compared to three years ago. According to CryptoQuant data, as of September 1, 2020, trading platforms had 2.828 million BTC in reserves. Approximately three years later, this number dropped to 2.024 million, indicating a decrease of 804,000 BTC. While BTC holdings have consistently decreased over these years, the FTX incident caused a major drop.

Before declaring bankruptcy in November 2022, there were 2.511 million BTC on exchanges, indicating that 487,000 BTC has been withdrawn since then. In just three months since May 23, 2023, approximately 184,000 BTC has been withdrawn from central crypto exchanges. By August 28, the BTC holdings on these platforms were almost below the 2 million mark, and CryptoQuant data showed a balance of 2,007,427 BTC. There has been a modest increase in the past few days, and Bitcoin ownership has risen to 2.024 million.

As of September 2, 2023, data shows that Binance, the largest central trading platform, has withdrawn 892.09 BTC in the past 30 days. During the same period, Coinbase lost 5,718.86 BTC according to other metrics. Bitfinex lost 429.02 BTC, and Okx lost 1,778.97 BTC. Among the top five, Gemini saw a significant outflow of 22,313.24 BTC from reserves. Additionally, Bitfinex recorded a large withdrawal of 30,673.34 BTC in the past month.

What does this mean?

The trend of withdrawing BTC from central exchanges highlights users’ preference for self-custody Bitcoin storage methods. This approach eliminates risks associated with exchange vulnerabilities such as hacks, potential bankruptcies, or regulatory pressures by providing users with full control over their assets.

The FTX collapse served as a reminder of these risks and further emphasized the ideology of self-custody. While the exact reasons for these large withdrawals are uncertain, the advantages of self-custody cannot be denied.