Bitcoin and Ether Retreat from Exchanges Amidst Regulatory Pressure

 Bitcoin and Ether Retreat from Exchanges Amidst Regulatory Pressure


Bitcoin and ether held on exchanges experienced a decline in June due to increased regulations and concerns over security, according to a report released on Tuesday by Goldman Sachs. The report cited on-chain data to support its findings.

The supply of bitcoin, the largest cryptocurrency by market capitalization, dropped by 4% in June, reaching levels not seen since December 2022, which was the lowest since November 2020 and just before the onset of the 2021 bull market. Meanwhile, the supply of ether slid by 5.8%, reaching levels last observed in May 2018.

Goldman Sachs identified several factors contributing to this trend. The report stated that major centralized spot exchanges faced regulatory obstacles, causing investors to exercise caution. Additionally, the prevalence of cyber hacks and theft in the crypto markets highlighted the preference among asset holders for self custody, aligning with the popular adage "not your keys, not your coins." Specifically for ether, the ability to withdraw staked ether led investors to choose staking over passive holdings on exchanges.

The report also highlighted that June witnessed record sales of bitcoin miners' inventories, as miners capitalized on the strong performance of the cryptocurrency. Total monthly inflows of BTC from miners to exchanges nearly doubled from May to $99 million. During the same period, the bitcoin price rose by approximately 12%, according to TradingView data.

With transaction fees returning to normal levels in June following the network congestion observed in May, both bitcoin and ether experienced a rebound in monthly address activity. Bitcoin recorded a 15.5% increase, while ether saw a surge of 37.5%. Furthermore, Goldman Sachs noted a significant decrease of 65.1% in average daily ether burnt and a 63.3% drop in average daily fees compared to the previous month.

The report also highlighted a rise in new on-chain activity in June. The daily average new address count for both bitcoin and ether increased by 9.8% and 48.2% respectively compared to the previous month.


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