record of Bitcoin in reserve also thanks to ETFs

The most important US crypto exchange, Coinbase, is about to reach the significant milestone of 1 million Bitcoin in reserve. This milestone could be achieved soon thanks to ETFs.

However, it is not only about the BTC of the exchange’s customers held in the company’s wallets, but also about all the Bitcoin held for all customers, including those in the Custody section. Coinbase Custody is the main custodian of American ETFs on spot Bitcoin. 

The Bitcoins held by Coinbase: the reserve increases thanks to ETFs

According to the data collected and published by Arkham Intelligence, Coinbase Global would currently have over 995,000 BTC in its custody on its wallets.

This is an equivalent value of almost 42 billion dollars, which is more than double the 16 billion dollars of ETH held by Coinbase. Interestingly, Circle’s partner company holds less than 600 million dollars in USDC, so much so that the third most held token is Chainlink’s LINK with over 1.1 billion dollars. 

However, Arkham distinguishes between Coinbase Global and Coinbase Prime, which is the exchange dedicated to large institutional clients, including ETFs. 

Coinbase Prime holds much fewer BTC, specifically just over 1,500, and since it is the exchange to which Bitcoin from the Grayscale ETF is sent for liquidation, it is evident that these have already been sold.

GBTC has sent over 100,000 BTC to Coinbase Prime in the last two weeks, but Coinbase Prime currently only has 1,500 BTC in its treasury. 

Note that Coinbase Prime also provides custody services to its large clients, so since it holds few BTC in cash, it means that its clients actually use this institutional-level platform mainly for selling or buying Bitcoin, but not for custody.

The other exchanges

On Arkham Intelligence it is discovered that, for example, the international version of Binance, which is the largest crypto exchange in the world in terms of trading volumes, holds “only” 664,000 BTC, so much so that in dollars it holds more BNB than BTC: 50 billion versus 28. 

Therefore, Coinbase Global is, among exchanges, the largest holder of Bitcoin in the world, thanks also to its custody service. 

As far as we know, there is only one other person in the world who holds more: Satoshi Nakamoto. 

Nakamoto, however, disappeared in 2011 and acquired his 1.1 million BTC by mining them. Furthermore, he never used them. 

Coinbase, on the other hand, is still fully operational and has acquired them through deposits from its own customers. 

Just to have a benchmark that helps understand how many one million BTC are, Grayscale’s ETF holds about 500,000, which is a little over half, although it will probably fall below this threshold this week. 

MicroStrategy holds almost 190,000, while Block.one holds 164,000. It seems that the US Department of Justice holds over 200,000, thanks to various seizures that have taken place over the years, and China for the same reasons should hold 190,000. 

In addition to these, we must mention the 157,000 BTC held on bridges like WBTC (Wrapped Bitcoin), and the 140,000 still held by the failed Japanese exchange Mt.Gox in 2014. 

The ETFs

The world’s largest spot Bitcoin ETF, namely Grayscale Bitcoin Trust (GBTC), holds its BTC on Coinbase Custody wallets. 

During the last two weeks, he has liquidated many of them, so the GBTC Bitcoins are decreasing. 

But also BlackRock’s ETF, IBIT, has Coinbase Custody as its custodian. IBIT has acquired almost 50,000 BTC in two weeks, which have always ended up in Coinbase Custody’s wallets. 

Even the ARK ETF, ARKB, has the same custodian, and in two weeks it has acquired more than 13,000 BTC. 

The fact that Coinbase Custody has been chosen by numerous American ETFs as the custodian of their BTC has resulted in an increase in the Bitcoin held in custody at Coinbase, despite the strong liquidations of GBTC. 

Coinbase and the new record of BTC in reserve: Bitcoin ETFs help

Coinbase is also a publicly traded company on Nasdaq. 

Note that starting from December 29th, the price of its stocks on the stock exchange has decreased. 

Previously, however, it had risen from around $70 at the end of October to $187 on December 28th, before starting a descent that brought the price back down to $121.

The current price is still 70% higher than the end of October, but not much higher than the $114 of mid-July 2023. 

Furthermore, it is still well below the $381 starting point in April 2021. 

The company still has ongoing disputes with the SEC, although several analysts believe that the SEC’s defeat is likely. 

Now not only is it the main American crypto exchange, but it is also effectively the largest custodian of Bitcoin in the world, since Satoshi Nakamoto is effectively missing.