Business 10 January 2019Erik Gibbs
Crypto exchange wallet holdings are falling
Over the course of the past three months, the balances of cryptocurrency wallets held by exchanges has declined. Most notably, exchange-held Bitcoin Core (BTC) and Ether (ETH) assets dropped 6%, while the holdings of once-prominent stablecoin Tether were reduced by 40%. Many of the top exchanges have shown decreases when comparing their 2018 fourth-quarter balances with those registered in the first quarter of 2019.
Kraken saw the biggest decline. In the last quarter of 2018, it held 98,026 BTC. However, this number dropped by 21.7% to 76,710 in the current quarter. Next was the Poloniex exchange, dropping 21.6% from 6,708 to 5,260. In addition to these two, Binance, Bitfinex and Bittrex registered declines of between 2.6% and 17.4%. Only Bittrex – which reportedly didn’t register any change in its holdings – and Huobi stayed on the positive side. Huobi saw its holdings increase 10.3% from 98,042 to 108,135 BTC.
There could be a number of reasons why the holdings have dropped. It could be that investors are not as active in crypto speculation due to the extended bear market last year, or it’s possible that users have opted to remove their assets from the exchanges in favor of their own wallets.
Binance holds the largest amount of crypto. It reported controlling $1.5 billion in BTC, ETH and Tether. Of all the top exchanges, Coinbase and BitMEX don’t maintain publicly-known wallets, meaning these exchanges’ holdings cannot be ascertained. However, Coinbase announced in December that it had moved as much as 5% of BTC and 8% of ETH for scheduled maintenance of its wallets. BitMEX has stated that it holds at least 1% of all BTC in circulation.
The Huobi exchange controls around $904 million of the crypto in circulation, followed by Bitfinex with $824 million. After that, it’s Bittrex with $708 million and Kraken with $570 million.
Tether’s declines are more than likely the result of the stablecoin suffering from bad publicity last year. Attempts to have Tether release audits to confirm that there were actual dollars backing the digital currency were denied and the company was forced to find a new banking partner after it was revealed that its former partner, Noble Bank, found itself short on cash. In addition, competition from other stablecoins, such as USDC, the Gemini dollar and Paxos, have stifled the currency.
Cryptocurrency prices are once again rising, albeit slightly. This could be an indication that the markets will bounce back this year and levels of trading will once again rise. However, what is more probable is that we are finally seeing a stabilizing of the markets, which is going to help the overall crypto industry grow and allow digital currency to take its rightful place alongside fiat.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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