Bitcoin self-custody has plunged to about 49%, a steep drop from nearly 78% in late 2022, according to Glassnode data featured by Bitcoin Magazine. This marks a historic shift as institutional players increasingly dominate Bitcoin holdings.
Spot Bitcoin ETPs and ETFs now hold around 1.3 million BTC, roughly 6.4% of all circulating Bitcoin. On top of that, public companies own over 1 million BTC collectively, each with at least 1,000 BTC stashed across various entities. This trend shows fewer individuals are keeping their coins directly.
Despite the FTX collapse in 2022 reinforcing the old mantra “not your keys, not your coins,” only about 10% of the estimated 600 million crypto users actually self-custody their assets. Hardware wallet users number between 12 and 13 million, just around 2%. This suggests most investors favor convenience and regulatory clarity over full control.
If a major ETF custodian faces a security breach or regulatory intervention, millions might be exposed to risks they don’t fully understand, since they own shares in funds rather than Bitcoin itself. This dynamic shifts the risk profile dramatically compared to holding coins in a personal hardware wallet.
The market clearly leans toward custodial solutions, but the lessons from 2022’s turmoil remain relevant they are just being overlooked.
This content is informational and not a financial recommendation.
