The supply of Bitcoin is dwindling, with only around 6% of the token left in circulation on cryptocurrency exchanges, data from Cryptorank shows.
According to the firm’s findings, around 1.3 million bitcoins, or 6.3% of the total supply, is currently held on cryptocurrency exchanges.
The decrease in supply should not come as a shock, analysts say, after Bitcoin halved last year when its block reward was cut in two. The token’s availability on exchanges followed, gradually dropping over the year. The December figure is the lowest recorded in 2021, after the previous low of 7.3% in July.
Also, the largest crypto platform, Coinbase, which used to have more tokens in circulation than all other exchanges combined, appears to be losing its dominance. The US-based exchange dropped from having 50.52% of Bitcoin’s total circulation in its wallets earlier this year to 40.65% this month.
Fearing further volatility in the price of Bitcoin, many investors lock away their tokens in ‘cold storage’, or offline wallets, separate from internet access and therefore considered one of the safest methods for holding Bitcoin, analysts say. Others continue to store bitcoins on exchanges while not trading them, which means the actual volume in circulation may be even lower than 1.3 million.
Unless Bitcoin passes the $50,000 threshold again, its circulation may drop even lower, analysts predict.
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