Record Low Bitcoin Supply on Centralized Exchanges
According to a recent report by on-chain analytics firm Santiment, the supply of Bitcoin on centralized exchanges is at its lowest point since November 2018. Santiment measures the total amount of Bitcoin stored in centralized exchange wallets and the supply held in self-custodial wallets.
Supply on Exchanges Reflects Available Selling Supply
Investors typically deposit Bitcoin to exchanges for the purpose of selling, so the supply on exchanges is an indicator of the available selling supply of Bitcoin. An increase in this metric can indicate an increase in selling pressure, potentially leading to a bearish market for Bitcoin. Conversely, a decrease in the supply on exchanges can have a long-term bullish effect on the price of Bitcoin.
Supply Shock No Longer a Concern
In the past, a decrease in the supply on exchanges was considered a potential trigger for a supply shock in the market. However, with the current diverse market environment, centralized exchanges play a minor role. Despite this, their supply still holds some significance for the market.
Decreased Supply on Exchanges Suggests Net Withdrawal of Bitcoin
The supply of Bitcoin on centralized exchanges has been steadily declining, suggesting that investors have been withdrawing a net amount of coins from these platforms. The largest decrease in the past year was due to the collapse of cryptocurrency exchange FTX, which led to a loss of trust in centralized platforms and a massive withdrawal of Bitcoin to self-custodial wallets.
Supply Outside of Exchanges Hits All-Time High
As the supply of Bitcoin on centralized exchanges continues to decline, the supply held in self-custodial wallets has reached a new all-time high of 18.12 million BTC. This means that the supply of Bitcoin outside of exchanges is now 14.26 times greater than the supply inside centralized platforms.