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One of the world’s leading investment banks, US-based Goldman Sachs, reported a substantial decrease in the supply of Bitcoin (BTC) and Ethereum (ETH) on exchanges in June, based on on-chain data. The decline is attributed to increasing regulatory pressures and a shift towards self-custody.
Biggest Drop in BTC and ETH Supply on Exchanges Recently
According to the report published by Goldman Sachs, the exchange supply of BTC, the largest cryptocurrency by market value, dropped by 4% in June. This brought it down to levels unseen since November 2020, and it is now approaching the levels observed just before the start of the 2021 bull market. The exchange supply of ETH, the largest altcoin by market value, also fell by 5.8% during the same period, hitting a low unseen since May 2018.
The banking giant stated that this trend is supported by several factors. It said, “Large centralized spot exchanges are facing regulatory headwinds that alarm investors. Cyber attacks and theft continue to be sources of concern for the crypto market. Asset owners are shifting towards self-custody, guided by the popular saying ‘If you don’t hold the keys, the coins aren’t yours’. Especially for Ethereum, the initiation of withdrawal processes for staked ETHs led investors to prefer staking their coins instead of keeping them on exchanges.”
Market observers consider the drop in BTC and ETH supply on exchanges to a historic low as a positive signal for the price, as it could prevent potential selling pressure.
Record BTC Sales by Bitcoin Miners in June
Goldman Sachs stated that June was a record month for Bitcoin miners‘ sales, as they took advantage of the strong performance of the largest cryptocurrency to sell. The report mentions that the total monthly BTC inflow from miners to exchanges nearly doubled from May, reaching $99 million. During this period, the Bitcoin price increased approximately by 12%.
Furthermore, the report noted that after the network congestion experienced on the Bitcoin network in May, transaction fees returned to normal in June. Monthly address activity for BTC and ETH recovered, increasing by 15.5% and 37.5% respectively. Goldman Sachs also added that the average daily ETH burn decreased by 65.1%, and the average daily transaction fee decreased by 63.3% compared to the previous month. However, the on-chain activity for both cryptocurrencies significantly increased, with the average daily creation of new addresses for Bitcoin and Ethereum rising by 9.8% and 48.2% respectively compared to a month ago.
