Bitcoin’s percent supply on exchanges has dropped below 11% for the first time since 2018, indicating growing withdrawals largely driven by institutional adoption. Since March 2020, over 6% of Bitcoin's total supply, approximately 1.26 million BTC, has been withdrawn from exchange wallets. The latest data show that Bitcoin HODLing has reached a two-year high, with reduced exchange deposits contrasting against rising prices. Institutions like BlackRock and Fidelity are now opting for custodial services rather than public exchanges, with Coinbase Prime witnessing significant asset inflows while traditional exchanges, like Coinbase, report substantial BTC outflows. Additionally, trust in centralized platforms has deteriorated following the FTX collapse, resulting in a significant trend of withdrawals moving toward self-custody and alternative trading solutions. From November 2022 to May 2023, Bitcoin outflows from exchanges have surged, marking one of the largest pullbacks in its history. This shift suggests a long-term behavioral change among investors, moving towards self-custody and institutional custodianship rather than relying on centralized exchanges.

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