Arcane Research says that investors are moving their Bitcoin (BTC) out of exchanges as crypto users increasingly prefer holding their own digital assets.
In a new report, the crypto insights firm says that the benchmark digital asset has been flowing out of exchanges for seven of the past eight months of 2022.
According to the report, Bitcoin deposits saw an uptick in May, but BTC in exchanges plunged again in June as investors withdrew their assets after the collapse of Terra (LUNA).
From a positive net flow of 42,000 BTC in May, the outflow in exchanges was 119,000 BTC in June, the highest since November 2020.
Withdrawals of Bitcoin continued in July and August as several other crypto firms, including hedge fund Three Arrows Capital and crypto lender Celsius Network declared insolvency.
The report says that the amount of Bitcoin flying out of exchanges suggests that holders of BTC are losing their trust in centralized crypto firms.
“The massive bitcoin outflows from centralized counterparties indicate that crypto hodlers are trusting the exchanges and lenders less than before. Bitcoin is increasingly being moved into cold storage, further indicated by the recent sales boost hardware wallet manufacturers like Ledger and Trezor have seen.
Although the counterparty risk for one particular lender or exchange might be small, history has been the kindest to the crypto hodlers who keep the majority of their assets safely in cold storage. It’s always better to be safe than sorry.”
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