Bitcoin's Self-Custody Rate Plummets as Investors Flock to Custodial Solutions
Bitcoin's self-custody rate has dropped to approximately 49% for the first time in its history, down from around 78% in late 2022. According to Glassnode data cited by Bitcoin Magazine, this marks a significant shift in how individuals hold their BTC. A large portion of this decline can be attributed to the growing popularity of spot Bitcoin ETPs and ETFs, which now collectively hold approximately 1.3 million BTC, representing about 6.4% of the total circulating supply.
Public corporations have also joined the party, with companies collectively holding more than 1 million BTC across various entities, each with holdings of at least 1,000 BTC. This trend is a stark reminder that investors are prioritizing convenience and regulatory clarity over sovereignty and counterparty risk elimination. The lessons of 2022's FTX collapse have not been forgotten, but they may be being overlooked in favor of more convenient custodial solutions.
The distinction between self-custody and custodial solutions is crucial, as the former eliminates the risk of a security breach or regulatory seizure affecting one's investment. With an estimated 10% of cryptocurrency users engaging in self-custody practices out of approximately 600 million users globally, there is still room for growth in this area.