Since 2020, the supply of Bitcoin (BTC) on exchanges has fallen by up to 25%. This decline is likely to increase further due to the entry of major institutions like BlackRock and Fidelity into the cryptosphere. However, there’s another factor that has caught attention: BTC exchange supply is drying up.
Banks’ Paradigm Shift: Requesting Easier Access to BTC
In a surprising twist, banks are changing their stance on BTC. They have sent an open letter to the SEC requesting that access to and holding of digital currency be made easier. Specifically, they want the regulatory body to revisit and amend Bulletin number 121, which outlines how crypto asset holdings should be reported and safeguarded by banks. This move signifies a significant shift in institutional perception towards
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BTC Levels on Exchanges at a 24-Month Low
According to data from Glassnode, the number of BTC held on crypto exchanges is currently at its lowest level since July 2020. There is nearly 25% less BTC available on exchanges (either in wallets or up for trade) than there was four years ago, despite thousands more BTC theoretically entering circulation since then.
This trend has been ongoing even before the recent spot ETF approval by the Securities and Exchange Commission (SEC). The collapse of FTX in 2022 may have contributed to this decline as investors reconsidered custody of their digital assets. However, more broadly, it reflects that BTC holders are increasingly opting for long-term storage in their wallets rather than leaving it on exchanges for easy trading.
Most spot ETF brokers are likely to hold BTC (which backs their funds) through safe custodial means such as a mix of hot and cold wallets. As more people invest in spot ETFs, there is less BTC supply available on crypto exchanges.
Bitcoin’s (BTC) recent rally has been driven by the spectacular introduction of exchange-traded funds (ETF). It may now be time to focus on ether (ETH), the second-largest cryptocurrency, broker Bernstein said in a research report on Monday. Ether is “probably the only other digital asset likely to get a spot ETF approval by the SEC,” the report said.
Bernstein says there is about a 50% chance of ether spot ETF approval by May and near-certain probability of approval in the next 12 months. Ether rose over 3% on Monday, while bitcoin gained just over 1%. Ether has outpaced bitcoin over the past week, gaining over 16% in seven days to trade above $2,900 for the first time in nearly two years while the bitcoin price rose a more sedate 8.5% to $52,300.
Financial giants entering the crypto game have had several effects on the market, including an influx of money entering the sector. But there’s been one factor that nobody really considered – BTC exchange supply is drying up. According to a glassnode graph documenting the number of BTC held on crypto exchanges, supply is at the lowest it’s been since July 2020.
Even before the spot ETF approval, Bitcoin held on exchanges was rapidly diminishing. This may have been spurred on by the disastrous collapse of FTX in 2022
Honduras imposes strict ban on Crypto Trading
The National Banking and Securities Commission (CNBS) of Honduras has recently taken a significant step by announcing a ban that prohibits local financial institutions from participating in crypto trading and holding digital assets. This measure has been adopted with the aim of preserving the integrity of the national financial system through stricter control.
Honduran regulations currently lack specific provisions for cryptographic assets, which exposes users to risks such as fraud, operational issues, and legal uncertainties. Additionally, there are growing concerns about the use of such assets for illicit activities like money laundering and terrorism financing.
The CNBS has highlighted the challenges related to the decentralized nature of many cryptocurrency-related businesses operating in Honduras, often registered in external jurisdictions. This decentralization makes regulatory supervision difficult, allowing potentially unmonitored activities.
To address these issues, the CNBS has issued a directive explicitly prohibiting Honduran financial entities from associating with cryptocurrencies, virtual currencies, tokens, or digital assets not authorized by the Central Bank of Honduras. This move aims to maintain tight control over financial activities and preserve the integrity of the sector within the country.
Decentralized Finance (DeFi) has emerged as a revolutionary force within the financial industry, leveraging blockchain technology and smart contracts to enable a wide range of financial services and applications that operate outside traditional banking institutions. By eliminating intermediaries, DeFi democratizes access to financial services, reduces costs, and fosters financial inclusion on a global scale.
DeFi encompasses various services built on decentralized blockchain networks, primarily Ethereum. These services include lending and borrowing platforms, decentralized exchanges (DEXs), asset management, insurance, derivatives, and prediction markets.
Through smart contracts—self-executing agreements with terms directly written into code—DeFi platforms automate transactions and enable peer-to-peer financial interactions without relying on centralized authorities.
As DeFi continues to grow and attract significant capital, it becomes essential to establish legal and regulatory frameworks that address the unique challenges posed by this new financial ecosystem.
While DeFi offers numerous advantages, it also raises concerns about consumer protection, financial stability, and compliance with existing regulations such as anti-money laundering (AML) and know-your-customer (KYC) requirements.
The decentralized nature of DeFi presents challenges related to consumer protection. Unlike traditional financial institutions, which are subject to regulatory oversight, DeFi platforms operate without central authorities.
Users maintain full control of their assets and transact through smart contract programs. However, this lack of intermediaries can lead to increased risks for consumers—such as potential fraud or loss of funds—without clear avenues for recourse.
Interestingly, this ban comes at a time when institutional interest in the crypto sector is increasing globally. In the United States, several exchange-traded funds (ETFs) related to Bitcoin have been launched. US banking actors are pushing for a review of rules that currently make it expensive to provide custody services for these ETFs.