Binance Research: Large Scale Hodlers Prefer Exchanges To Assets

A new study from the research wing of Binance reveals that large scale Crypto investors prefer to store their Digital Assets in exchange-based custodial platforms rather than wallets as it is widely believed to be the case.

This large scale Crypto hodlers are the whales who own the bulk of Digital Tokens and whose trading tendencies often create ripples in the market. For instance, late last month, there was a short term period of BTC/USD bear run as whales placed sell orders for a huge number of BTC tilting the Relative Strength Index (RSI) of Bitcoin to the overbought side.

Therefore, the research findings indicate that Crypto exchanges are ideal for large scale Assets under Management [AuM] investors whose account books read at least $25 million in funds.

Exchanges Are Still Popular In The Crypto Economy

Despite the recent case of cyber-attack and online heists on Crypto trading platforms, there is still widespread faith in exchanges.

Some of the exchanges that have controversial operations include Cryptopia and QuadrigaCX where hodlers have lost their Crypto assets. On the other hand, Binance and Bithumb have been hacked but in these cases, users’ portfolios have not been impacted as affected users have been reimbursed.

New Trends Of “Decentralization And Custodianship”

The Binance Research report that details about the new trends in Crypto custodial services is titled “Decentralization and custodianship.” In no particular order, the top four Crypto storage platforms are custody services, exchanges, hot wallets, and cold wallets.

It is important to take note of the fact that different classes of investors have different preferences. Firstly, Crypto investors whose portfolios have funds of over $5 million have been shown to prefer cold wallets than any other storage solution.

In contrast, large scale Crypto hodlers who have Assets under Management (AuM) interests prefer exchanges to any other method of Digital Asset storage.

From the general perspective, 80% of respondents store their Cryptocurrencies on exchanges, 58% prefer cold wallets, 35% select hot wallets, and under 15% prefer vault based custodial services.

The findings show that most of the storage solutions are used concurrently with each other.

Why Are Exchanges Popular?

The 80% of the respondents who store Digital currencies in exchanges are in favor of trading platforms as it is more convenient to trade high turnover Digital Tokens frequently with Cryptocurrencies on the exchange. This strategy enables buyers to escape fees changed when transferring Tokens from a wallet to an exchange that can be costly in many instances.


In the meantime, Decentralized exchanges are not as popular as conventional Crypto exchanges as only 55% of the respondents stated that they use DEX platforms to store Cryptos. The Binance Research cites three factors for the lower preference of DEX storage solutions including non-intuitive user experience, compliance concerns, and liquidity concerns.

Crypto Lending And Borrowing Is Also Gaining Tract

As is the case in the traditional banking system, depositors are able to earn interest from depositing currencies and also benefit from lending services.

In the Crypto space, borrowing and lending services are gaining tract as 33% are shown to be borrowing or lending as Crypto trading matures.