Cryptoverse: Bitcoin investors take control

January 24 (Reuters) – Delusion? A domino toppling of FTX and other crypto custodians is enough for the most trustworthy investors to get their hands on Bitcoin and shove it under their mattress.

In fact, holders large and small are “self-managing” their funds, moving them from cryptocurrency exchanges and trading platforms to personal digital wallets.

In a sign of this shift among retail investors, the number of bitcoins held in small wallets with 10 or less bitcoins has increased 23% from 2.72 million a year ago, up 11 January. increased to 3.35 million as of today. from coin metrics.

As a percentage of the total Bitcoin supply, wallet addresses holding less than 10 Bitcoins now own 17.4%, up from 14.4% a year ago.

“A lot of this depends a lot on how often you trade,” said Joshua Peck, founder of hedge fund Truecode Capital. It would be worth learning how to store really well.”

Led by big investors, the FTX scandal and other cryptocurrency demise have accelerated the stampede.

The seven-day average of daily transfers of funds from centralized exchanges to individual wallets jumped to a six-month high of $1.3 billion in mid-November when FTX collapsed, according to Chainalysis data.

According to the data, large investors transferring $100,000 or more accounted for about 68% of these flows.

Reuters Graphics

where is my key

No keys, no coins.

This mantra among early crypto enthusiasts, warning that access to funds is paramount, regularly circulated online last year when financial platforms fell like flies.

However, self-management is not a walk in the park.

Wallets can range from “hot” connected to the internet to “cold” in offline hardware devices, the latter usually being a first-time investment when buying cryptocurrencies on big exchanges. Not attractive for home.

Multi-level security is often a cumbersome and expensive process for time-poor investors, and protects cryptographic keys (strings of data similar to passwords) from being lost or forgotten. There are always challenges.

Hardware wallets, on the other hand, can be damaged or stolen.

Peck of TrueCode Capital said: – A portfolio of $1 million cryptocurrencies. “

Institutional investors also look to regulated custodians (specialized firms that can keep funds in cold storage), as many traditional financial firms cannot legally “self-custody” investor assets. is pointing.

One such company, BitGo, which provides custodial services to institutional investors and traders, said that onboarding inquiries from people looking to move funds from exchanges dropped in December compared to the previous month. 25% increase and said assets increased 20%. In detention.

Enclave Markets CEO David Wells said the trading platform is very cautious about the risks of storing investors’ assets in third parties.

“The comment that stuck with me was, ‘Investors are going to allow us to lose some money with our trading strategy because they think it’s their sign up and they don’t want me to. It’s because you’re a poor custodian that you won’t forgive us.”

(This article has been amended at paragraph 8 to indicate that large investors were involved in about 68% of the flows)

Reporting by Medha Singh and Lisa Pauline Mattackal of Bengaluru. Edited by Pravin Char

Our criteria: Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect Reuters News’ commitment to integrity, independence and freedom from bias under its Trust Principles.

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