Key Takeaways
- The report attributed the decrease in supply to the increasing regulatory landscape and growing concerns about security breaches, which prompted investors to opt for self-custody.
- BTC saw supply drop by 5%, and ETH supply decreased by 5.8%
In a Tuesday report released by Wall Street Giant Goldman Sachs, it was revealed that the supply of bitcoin (BTC) and ether (ETH) on cryptocurrency exchanges experienced a significant decline in June. The report cited on-chain data and attributed the decrease in supply to the increasing regulatory landscape and growing concerns about security breaches, which prompted investors to opt for self-custody.
Bitcoin, the largest cryptocurrency by market capitalization, saw its supply drop by 4%, reaching levels not seen since December 2022. This was the lowest supply recorded since November 2020, just prior to the start of the bullish market in 2021. Similarly, the supply of ether decreased by 5.8%, reaching levels last observed in May 2018.
The report highlighted that major centralized spot exchanges are facing regulatory challenges, causing investors to become cautious. Additionally, the prevalence of cyber hacks and thefts within the crypto markets further emphasized the preference for self-custody among asset holders. Specifically, for ether, the option to stake ETH and withdraw it has influenced investors to choose staking rather than passively holding their assets on exchanges.
Goldman Sachs also noted that June witnessed a record month for bitcoin miners’ inventory sales, as miners capitalized on the cryptocurrency’s strong performance. Total monthly BTC inflows from miners to exchanges nearly doubled from May, reaching $99 million. During this period, the bitcoin price increased by almost 12%, according to TradingView data.
Furthermore, after experiencing network congestion in May, transaction fees returned to normal in June. This led to a rebound in monthly address activity for both Bitcoin and ether, with gains of 15.5% and 37.5%, respectively. The report also highlighted a significant decline in average daily ether burnt by 65.1% and average daily fees by 63.3% on a month-on-month basis. Bitcoin is trading at $30814 while Ether is trading at $1937 at the time of writing.
