Despite the crypto market gradually improving with time, it is still fairly evident that investors still haven’t regained proper confidence. Cryptocurrencies are increasingly volatile and this volatility has resulted in great losses, especially in the previous year. Cryptocurrencies have been in the green since the start of this year, but many have resorted to ditching exchanges in the favor of self-custody.
The main reasons for such a shift can be linked directly to the mishaps in the cryptocurrencies market the previous year. Cryptocurrencies were subject to a considerable decline in their value earlier last year. The initial crypto winter was expected to last only for a few weeks, but the situation changed within the blink of an eye. Investors had to face a great number of losses as a result of the never-ending nightmare. The FED continuously jacking up interest rates was also another factor. These increases led to a sharp decline in the values of already affected cryptocurrencies. The main aim of the FED was to steer the economy toward recession.
Similarly, another reason that pushed investors to shift to self-custody was the collapse of FTX. Cryptocurrencies were greatly shaken as a result, and so were investors. Numerous firms filed for bankruptcy and others reduced their employee force considerably. As long as the investors are concerned, many of them ended up getting their funds stuck on the exchange. When the exchange filed for bankruptcy, a cloud of uncertainty and gloom hovered over them. Such an issue, when kept in mind, stripped investors of their confidence regarding investing in crypto. At the same time, it even gave rise to their desire to opt for self-custodial wallets.
Self-Custody of Cryptocurrencies is on the risE
One of the major reasons for investors choosing to go for self-custody is the collapse of the FTX exchange. Keeping in mind the previous bottlenecks, investors display a sense of paranoia and fear that something like the previous incident might happen once again. As a result, they prefer to play it safe by keeping their assets to themselves.
📉 The overall supply of #Bitcoin on exchanges has dropped from 11.85% to 6.65% over the past year, a historic drop that illustrates the rise in interest in self custody. #Binance, #Coinbase, #Kraken, #Kucoin, and #Bitstamp all reflect this $BTC exodus. https://t.co/4GSJs29fOK pic.twitter.com/aDLuAw3oiU
— Santiment (@santimentfeed) January 18, 2023
Based on a tweet, it is fairly easy to understand that the supply of BTC on a number of exchanges has dropped. Since the previous year, the supply has dropped from 11.85% to almost 6.65%. The considerable drop clearly shows how investors have shifted towards self-custody. However, the shift is expected to increase any time soon.