Bitcoin and Ethereum Reserves on Centralized Exchanges Reach All-Time Lows: What It Means for Crypto

Bitcoin reserves on centralized exchanges have plummeted to an all-time low, reflecting a significant shift in demand toward non-custodial solutions among cryptocurrency holders. Ethereum reserves have also dipped to historic lows, further illustrating this trend.

Current Exchange Reserves

As of October 13, centralized exchanges collectively held 2,666,717 bitcoins, according to data from CryptoQuant. This marks a notable decline from the peak of 3,361,854 BTC recorded on June 8, 2022. Since that time, reserves have been on a continuous downward trajectory.

The breakdown shows that spot exchanges hold approximately 1.1 million BTC, while derivative exchanges maintain around 1.39 million BTC. Major exchanges report the following Bitcoin reserves:

• Binance: 563,000 BTC
• Coinbase Advanced: 830,530 BTC
• Kraken: 112,300 BTC
• Coinbase Prime: 3,000 BTC

Interestingly, some exchanges like Bitfinex have bucked the trend, increasing their BTC reserves from a low of 244,909 in November 2021 to a high of 401,000 as of October 13.

Ethereum's centralized exchange reserves have similarly declined to an all-time low of 18.7 million ETH. Spot exchanges currently hold about 8.4 million ETH, while derivative exchanges have 10.3 million ETH in reserves. The all-time high for Ethereum reserves on exchanges was reached on September 6, 2022, at 2,310,823 ETH. Currently, major exchanges hold the following amounts:

• Binance: 3.6 million ETH
• Coinbase: 4.5 million ETH
• Kraken: 1.3 million ETH

Implications of Declining Reserves

The decrease in Bitcoin and Ethereum reserves on centralized exchanges indicates a growing preference for self-custody among investors. This trend suggests that crypto holders are more inclined to retain their assets rather than sell them, leading to decreased liquidity on exchanges. This scarcity could ultimately enhance the value of BTC and ETH over time.

Typically, an increase in reserves on centralized exchanges signals higher selling pressure, often correlating with price declines. Currently, Bitcoin is trading at approximately $63,911, having reached an all-time high of $73,000 in March of this year and fluctuating between $66,000 and $49,000 since then. Despite recent corrections, on-chain data from Glassnode indicates there are still 602,000 active addresses and high transaction volumes.

Ethereum is currently priced at around $2,464, according to CoinMarketCap, reflecting similar market dynamics.

Conclusion

The decline in Bitcoin and Ethereum reserves on centralized exchanges signifies a broader trend towards self-custody and long-term holding strategies among investors. As these assets become less liquid on exchanges, the potential for increased value over time may strengthen, making the current landscape particularly interesting for both seasoned and new investors in the cryptocurrency market.