Since March 2020, 1.1M BTC has been withdrawn from exchanges, 600k alone last year. If this trend continues all exchanges will be out of Bitcoin by 2026.

I think for all of us, exchanges played a role while we were entering Crypto, as those are just the simplest and most known way to start investing in Crypto. But already last year we were reminded, not one or two but multiple times, that holding your coins on those exchanges comes with the definite risk of losing it all.

Thankfully, people seemed to actually have learned their lesson last year and started to take self-custody of their Crypto. This caused, that alone last year 600k BTC was withdrawn from exchanges. Since March 2020, which was the peak of BTC that exchanges held at 3.5M (17% of total supply), 1.1M BTC was withdrawn from all exchanges decreasing their holdings to 11.7% of the total supply.

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Chart imported from glassnode

This chart is key to it and shows just show much of an influence FTX alone had to make people finally take self-custody, causing CEX holdings to drop from just over 2.5M to now 2.2M, with a single event. The chart may already look like a free-fall but it may even get worse for CEX: If the 600k BTC/year withdrawals continue, by 2025 there will only be 400k BTC left on exchanges and by 2026 none at all.

It is also worth noting that yes exchanges usually do increase their holdings but that happens in a bear market, as we can see the exact oppsite happened during this bear market which would leave exchanges to buy en masse in the middle of the next bull run if they want to survive.

This is probably one of the most important metric for Crypto today and in many years coming, exchanges are at a turning-point and they are losing badly. Either they wil die out (unlikely) or they will have to adapt.