Currently, the cryptocurrency exchange market is facing a shortage of Bitcoin as more and more crypto holders are moving their portfolio away and into personal wallets. Cryptocurrency analysts zeroed in on this market indicator and are using it to portray that sellers are fleeing the market and going long with the crypto especially as the centralized exchanges face renewed problems with the authorities. Many are moving these Bitcoin to their long-term wallets aka “accumulation wallets”.
According to Crypto analytics website Glassnode:
Bitcoin accumulation has been on a constant upwards trend for months. 2.6M $BTC (14% of supply) are currently held in accumulation addresses. Accumulation addresses are defined as addresses that have at least 2 incoming txs and have never spent BTC.”
The main concerns driving this scenario is that centralized exchanges are now being heavily scrutinized by the authorities and in some instances, they are even freezing their assets in place thus jeopardizing the positions of many crypto traders and affecting their overall confidence. BitMEX is a Bitcoin futures exchange that has some of the largest volumes in Bitcoin futures trading around the world. It was recently slapped with a heavy lawsuit by the Commodities and Futures Trading Commission (CFTC) in a district court of New York state for operating without a license and having no Anti Money Laundering (AML) systems in place including Know Your Customer (KYC) fundamentals. Similarly, OKEx, one of the biggest cryptocurrency exchanges in the world based in China is being scrutinized heavily by the Chinese government and a result, it recently had a freeze in place for withdrawals. Users expressed alarm on the move despite being assured by the current CEO of the exchange that the funds were safe and it was just a government background check that they were complying with. However, consumer confidence is a tricky subject and no one in the crypto world likes to see their assets frozen at any point in time.
Personal wallets offer much more freedom to users and cannot be sanctioned or frozen by any government actor because a user has full control over the money. Centralized exchanges do try to offer as much as they can to facilitate all users but the truth is that their hands are tied because they cannot risk being on the wrong side of the government or they will be penalized heavily, even stopping the exchange from operating in the country altogether. This is why some of the more concerned users are withdrawing their crypto from all kinds of exchanges to personal wallets. An additional factor for this trend is the increasing viability of HODLing. Users tend to HODL when they think the price index has a lot of flexibility for upward movements.
Currently, sellers are leaving exchanges and more and more institutions are venturing into the industry for long-term HODLing. So, it is always a positive sign for a future bull run of the cryptocurrency.
Image source: cafecredit.com
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