78% of Bitcoins circulating supply is now in self-custody, and rightfully so.

We have some to the end of this hell of a year and are knees-deep in a bear market. But there have also been some good developments here throughout the year, possibly also caused by the many collapses of big lenders or centralized exchanges, such as FTX and Celsius. One of that is the so-called illiquid supply of Bitcoin.

The illiquid supply defines what percentage of the current Bitcoin supply (about 19.24M) is in self-custody. This has been a very positive trend over the year as we jumped from just 14M BTC to now over 15M BTC in self-custody and meanwhile the BTC on exchanges has been declining over the year. Also you should bear in mind that a large percentage of that circulating supply is lost forever.

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Illiquid Supply from Glassnode

As we can see on this graph, especially the events around FTX have caused a massive spike in this metric as people obviously saw that your coins are not safe at all on exchanges but you should immediately shift them to self-custody. We can also compare it to previous drawdowns this year when LUNA and 3AC collapsed where we did not see a significant spike in the illiquid supply but now.

This year has been all about this very important lesson “not your keys, not you coins“ and many seem to finally take this seriously after the extreme examples of FTX and Celsius.