Finding reliable data on cryptocurrency exchanges is notoriously difficult. Last year, a widely circulated report from Bitwise cast serious doubt on the trading volumes self-reported by exchanges. In response, many exchange ranking sites and analytics firms introduced new metrics to assess exchanges and their reported volumes.
These metrics, however, come with their own flaws. Some exclude major exchanges; others rely on easily gamed indicators like website traffic or app store rankings; and most lack transparency in their methodology.
To find a better, more transparent way to evaluate exchanges, we turned to on-chain data from chain.info, focusing on exchange cold wallet holdings. By making a series of assumptions about fund flows between deposit, hot, and cold wallet addresses, we analyzed the cold wallets and assets held by major exchanges.
While this method isn't perfect—it still relies on assumptions and may not identify every cold wallet with 100% accuracy—it offers significant advantages over other metrics. Because the data comes from on-chain analysis, it is extremely difficult to fake.
So, which exchanges hold the most Bitcoin in cold storage according to our analysis?
First place goes to Coinbase, which holds more Bitcoin than any other exchange—and its reserves have grown significantly over the past year. This growth has been remarkably steady, clearly unfazed by Bitcoin's price swings. Coinbase's cold wallets are on the verge of holding over one million BTC.
Coinbase's clear lead and consistent growth likely stem from its strong appeal to long-term and institutional investors, who tend to be less concerned with short-term volatility.
How Other Major Exchanges Fared
The chart above reveals several key differences. Binance consistently held second place for most of the year, with no clear upward or downward trend during periods of fluctuation. Bitfinex started 2019 in third place but saw its Bitcoin holdings decline steadily through Q1, only recovering by year's end.
Bittrex, Bitstamp, and Kraken started the year in fourth, sixth, and seventh place respectively, and their cold wallet Bitcoin holdings remained largely flat throughout 2019.
Perhaps the most notable case is Huobi. Over the course of 2019, its Bitcoin cold wallet holdings surged, moving it from fifth to second place. Reports suggest that a significant portion of PlusToken's trading activity flowed through Huobi—if true, this could explain Huobi's dramatic climb in the rankings.
The four exchanges at the bottom of our analysis were Coincheck, Bitflyer, Gate.io, and OKEx. Among these, three saw their Bitcoin holdings increase, while Coincheck's remained flat.
In summary, Coinbase remains the top exchange by Bitcoin held in cold storage, and its lead has grown steadily over the past year. In 2019, exchanges like Binance, Bitfinex, Bittrex, Bitstamp, Kraken, and Coincheck showed relatively little change in their cold wallet Bitcoin balances. Meanwhile, Huobi, Bitflyer, OKEx, and Gate.io all experienced substantial growth.
A word of caution when interpreting this on-chain data: some sharp inflection points in the chart above may reflect our algorithms identifying new cold wallet addresses or data synchronization delays, not necessarily new deposits into exchange wallets.
Exchange Tokens
Several of the exchanges we studied have issued their own native tokens. This led us to ask: was there any correlation in 2019 between the performance of these tokens and the Bitcoin holdings in their respective cold wallets?
This hypothesis is plausible for two reasons. First, higher user deposits suggest greater user engagement and trading activity on a platform, which generates more revenue for the exchange. Second, substantial cold wallet holdings signal strong user confidence in the exchange's security against hacks or fraud, potentially making users more inclined to hold its native token.
Binance, Huobi, Bitfinex, Gate.io, and OKEx all have their own tokens. To isolate the performance of these tokens from Bitcoin's own volatility, we measured their returns against Bitcoin, not fiat currency.
We found that all exchange tokens performed exceptionally well in Q1 2019, delivering returns exceeding 100%. However, this strong performance faded in subsequent quarters. By year-end, the top performers were OKEx's token (up 2x) and Huobi's token (up 1.3x). Binance Coin (BNB) posted significant gains mid-year but couldn't sustain them through December. Tokens from Gate.io and Bitfinex declined steadily throughout 2019.
Based on 2019 data, there does appear to be some correlation. Both Huobi and OKEx saw growth in both cold wallet holdings and token price. Bitfinex and Binance remained relatively stable on both fronts. The outlier is Gate.io: its cold wallet Bitcoin holdings increased, yet its token price fell. This may be because Gate.io started with the smallest absolute cold wallet holdings in our sample, so even a relative increase lacked the scale to meaningfully impact its token's valuation.
While cold wallet holdings are not a perfect metric for evaluating cryptocurrency exchanges, they provide a valuable data point for gauging user base size, trading activity, and revenue potential. Moreover, this on-chain data is far more resistant to manipulation or falsification than other commonly cited metrics.