One of the most notable results of self-custody is that it tends to decrease circulation, reducing the market cap. This phenomenon has been observed in the cryptocurrency market, where self-custody has become increasingly popular among investors and traders. Here are some important things to know about this trend:
1. Self-custody refers to the practice of holding one’s own cryptocurrency assets, rather than entrusting them to a third-party custodian. This can be done through a variety of means, such as using a hardware wallet or storing coins on a personal computer.
2. When investors choose to hold their own assets, it can lead to a decrease in circulation. This is because those assets are no longer being actively traded on exchanges or other platforms. As a result, the overall supply of the cryptocurrency in question may appear to be lower, which can impact its market cap.
3. The impact of self-custody on market cap can vary depending on the specific cryptocurrency and the extent to which investors are choosing to hold their own assets. However, it is generally seen as a negative trend for the overall health of the market.
In summary, self-custody is a growing trend in the cryptocurrency market that can have a significant impact on circulation and market cap. While it may offer some benefits for individual investors, it is important to consider the broader implications for the market as a whole.