Supply of bitcoin declined 4 per cent, nearing the December 2022 level and Ether supply dropped 5.8 per cent to the lowest levels since May 2018

The supply of bitcoin and ether on exchanges declined in June as enhanced regulation and crime led holders to favour self custody, Goldman Sachs said in a report Tuesday, citing on-chain data.

Supply of bitcoin, the biggest cryptocurrency in terms of market capitalisation, declined 4 per cent, nearing the December 2022 level, itself the lowest since November 2020 – and right before the start of the 2021 bull market, according to the report. Ether supply dropped 5.8 per cent to the lowest levels since May 2018.

This trend is supported by a number of factors, the bank added.

Leading centralized spot exchanges are facing regulatory pressures putting investors on alert, cyber hacks and theft continue to be a concern across the crypto markets, underscoring asset holders’ preference for self custody, in accordance with the popular adage ‘not your keys, not your coins’, and particularly for ether, the enablement of staked ether withdrawals has resulted in investors’ preference to stake ether, rather than passively holding on exchanges, Goldman Sachs added.

Goldman observed that June was a record month for bitcoin miners’ inventory sales as miners took advantage of the cryptocurrency’s solid performance. Total monthly bitcoin inflows from miners to exchanges nearly doubled from May to $99 million, the bank added. The bitcoin price increased nearly 12 per cent, according to TradingView data.

As transaction fees returned to normal in June after the network congestion in May, monthly address activity for bitcoin and ether saw a bounce back, advancing 15.5 per cent and 37.5 per cent respectively, the bank said. Average daily ether burnt declined 65.1 per cent and average daily fees declined 63.3 per cent on a MoM basis, the report added.

May also saw a rise in new on-chain activity, with the daily average new address count for bitcoin and ether rising by 9.8 per cent and 48.2 per cent compared with a month prior, the bank added.