# Cryptoverse: Bitcoin investors take control Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-01-24 Category: TRADING Category URL: https://financedigest.com/category/trading Meta Title: FTX Scandal Spurs Surge in Self-Custody as Big Investors Meta Description: Learn why big investors are moving funds to personal wallets amidst FTX scandal. Discover the pros and cons of self-custody in the volatile crypto market. URL: https://financedigest.com/cryptoverse-bitcoin-investors-take-controlhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-01-24t061328z1lynxmpej0n04ertroptp4fintech-crypto-weekly-1736814551342-compressed.jpg) (Corrects paragraph 8 to show big investors were responsible for about 68% of the flows) By Lisa Pauline Mattackal and Medha Singh (Reuters) -Paranoid? The domino downfall of [FTX and other crypto custodians is enough to make the most trusting investor](https://www.financedigest.com/wave-of-lawsuits-over-ftx-expected-but-investors-will-face-legal-hurdles.html "‘Wave’ of lawsuits over FTX expected, but investors will face legal hurdles") grab their bitcoin and shove it under the mattress. Indeed, holders big and small are taking “self-custody” of their funds, moving them from [crypto exchanges and trading platforms](https://www.financedigest.com/meta-to-wind-down-nfts-on-platforms-amid-crypto-bust.html "Meta to wind down NFTs on platforms amid crypto bust") to personal digital wallets. In a sign of this [shift among retail](https://www.financedigest.com/analysis-visas-amazon-spat-shows-power-is-shifting-to-retailers-in-fee-battle.html "Analysis-Visa’s Amazon spat shows power is shifting to retailers in fee battle") investors, the number of bitcoin held in smaller wallets – those with under 10 bitcoin – rose to 3.35 million as of Jan. 11, up 23% from the 2.72 million held a year ago, [according to data](https://www.financedigest.com/most-sales-and-marketing-teams-struggle-to-activate-data-in-their-organisation-according-to-new-international-study.html "Most Sales and Marketing teams struggle to activate data in their organisation, according to new international study") from CoinMetrics. As a percentage of total bitcoin supply, wallet addresses holding under 10 bitcoin now own 17.4%, up from 14.4% a year ago. A lot of this really depends on how frequently you’re trading,” said Joshua Peck, founder of [hedge fund](https://www.financedigest.com/what-is-a-hedge-fund.html "What Is A Hedge Fund") TrueCode Capital. If you’re just going buy and hold for the next 10 years, then it’s probably worth making the [investment and learning](https://www.financedigest.com/3-investing-lessons-you-can-learn-from-still-evolving-pandemic.html "3 Investing lessons you can learn from still-evolving pandemic") how to custody your assets really, really well. The stampede has been turbocharged by the FTX scandal and other crypto collapses, with large [investors leading the way](https://www.financedigest.com/5-ways-that-start-ups-can-attract-investors.html "5 Ways That Start-Ups Can Attract Investors"). The 7-day average of daily movement of [funds from centralized exchanges to personal wallets jumped to a six-month high of $1.3 billion](https://www.financedigest.com/uk-investors-add-1-2-billion-to-equity-funds-in-march-calastone.html "UK investors add .2 billion to equity funds in March – Calastone") in mid-November, at the time of FTX collapse, according to data from Chainalysis. [Big investors](https://www.financedigest.com/investors-warn-big-consumer-firms-over-price-hikes-as-competitors-gain.html "Investors warn big consumer firms over price hikes as competitors gain") with transfers of above $100,000 were responsible for about 68% of those flows, the data showed. WHERE ARE MY KEYS? Not your keys, not your coins. This mantra among early crypto enthusiasts, cautioning that access to your funds is paramount, regularly trended [online last year as finance](https://www.financedigest.com/online-marketplaces-embracing-embedded-finance-to-benefit-both-customers-and-vendors.html "Online marketplaces: embracing embedded finance to benefit both customers and vendors     ") platforms dropped like flies. Self-custody’s no walk in the park, though. Wallets can range from “hot” ones connected to the internet or “cold” ones in offline hardware devices, although the latter typically don’t appeal to first-time investors, who often buy [crypto on big exchanges](https://www.financedigest.com/exclusive-binance-moved-346-million-for-seized-crypto-exchange-bitzlato-data-show.html "Exclusive-Binance moved 6 million for seized crypto exchange Bitzlato, data show"). The multi-level security can often be cumbersome and expensive process for a small-time investor, and there’s always the challenge of guarding keeping your encryption [key – a string of data](https://www.financedigest.com/sterling-edges-lower-ahead-of-key-data.html "Sterling edges lower ahead of key data") similar to a password – without losing or forgetting it. Meanwhile, hardware wallets can fail, or be stolen. It’s very challenging, because you have to [keep track](https://www.financedigest.com/will-mays-new-minister-percy-keep-the-northern-powerhouse-on-track-post-brexit.html "WILL MAY’S NEW MINISTER PERCY KEEP THE NORTHERN POWERHOUSE ON TRACK POST BREXIT?") of your keys, you have to back those keys up,” said Peck at TrueCode Capital, adding: “I’ll tell you it’s a very challenging prospect of doing self custody for a multi-million-dollar portfolio of crypto. Institutional investors are also turning to regulated custodians – specialized companies that can hold funds in cold storage – as many traditional finance [firms would not legally](https://www.financedigest.com/some-credit-suisse-at1-bondholders-seek-legal-advice-law-firms.html "Some Credit Suisse AT1 bondholders seek legal advice -law firms") be able to “self-custody” investors’ assets. One such firm, BitGo, which provides custodian services custody for [institutional investors](https://www.financedigest.com/institutional-investors-back-shell-board-lawsuit-over-climate-risk.html "Institutional investors back Shell board lawsuit over climate risk") and traders, said it saw a 25% increase in onboarding inquiries in December versus the month before from those looking to move their funds from exchanges, plus a 20% jump in assets under custody. David Wells, CEO of Enclave Markets, said [trading platforms](https://www.financedigest.com/stock-trading-platforms-for-beginners.html "Stock Trading Platforms for Beginners") were extremely cautious of the risks of storing the investors’ assets with a third party. A comment that stuck with me was [‘investors will forgive us for losing some of their money through our trading](https://www.financedigest.com/how-to-begin-investor-trading-in-australia.html "How to begin investor trading in Australia") strategies, because that’s what they sign up for, what they’re not going to forgive us is for being poor custodians’. (Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Pravin Char) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---