While Bitcoin and altcoin prices continue to fluctuate due to macroeconomic and geopolitical developments, the amount of Bitcoin and Ethereum held on centralized cryptocurrency exchanges has fallen to its lowest levels in recent years.
While this was previously considered a strong bullish signal, experts say that has changed.
According to data shared by cryptocurrency analytics company Santiment, the Bitcoin supply on exchanges has fallen to approximately 6.6% of the total circulating supply. Ethereum, meanwhile, has reached a historic low of 4.3%. These figures mean that the supply of BTC and ETH, respectively, has fallen to its lowest levels since 2017 and 2015.
Santiment noted that for many years, the market has considered the decrease in supply on exchanges as an indication that investors prefer to keep their assets in personal wallets rather than sell them. This was interpreted as a positive signal in terms of prices due to the reduced amount of coins available for sale.
However, according to experts, the situation has changed, and this assumption is no longer valid. Experts argue that a decrease in Bitcoin and Ethereum balances on exchanges can no longer be considered a bullish signal on its own. They state that due to the changing structure of the market, this indicator no longer carries the same strong meaning as before.
According to experts, Bitcoin’s institutional custody services, the shift of funds towards spot ETFs, staking, and DeFi, and the increasing practice of holding funds through different financial platforms make it difficult for exchange supply data alone to reflect market trends.
However, Santiment considers the historically low supply of Bitcoin and Ethereum on exchanges, even if the situation changes, a positive development in the long term.
“Bitcoin and Ethereum are showing one of the most promising long-term signals for cryptocurrencies: Bitcoin and Ethereum exchange supply has fallen to historically low levels.”
….This isn’t a guarantee that prices will rise, but it does reduce the risk of a major exchange-driven sell-off… Low exchange supply could help create a healthier foundation for crypto’s next sustainable bull cycle.”
Speaking to Coindesk, GoMining CEO Mark Zalan also stated that a decrease in supply on exchanges has been seen before many bull markets in the past, but it is impossible to predict exactly when the current trend will reverse based on this data.
