On-chain data shows bitcoin supply on exchanges has hit a novel low this year as investors continue to withdraw their coins.

Bitcoin exchange reserves have been on a downward trend recently

As explained by an analyst at CryptoQuant Quicktake fastingBTC’s Exchange Reserve has continued to decline recently. “Exchange Reserve” here refers to a metric that tracks the total amount of Bitcoin that is currently held in the wallets of all centralized exchanges.

When the value of this metric increases, it means that investors are currently depositing a certain amount of tokens on these platforms on a net basis. Since one of the main reasons investors move their coins to exchanges is for selling purposes, this type of trend could lead to a bearish outcome for the asset price.

On the other hand, a downward trending indicator value suggests that holders are withdrawing their BTC from exchanges. Such a trend can be bullish for the cryptocurrency as it means that investors are in accumulation mode.

Here is a chart showing the trend in Bitcoin exchange reserves since the beginning of 2024:

As you can see from the chart above, Bitcoin Exchange reserves have been decreasing throughout the year, meaning that investors have been steadily moving their coins into their own custody.

The chart shows that the indicator dropped particularly sharply when the BTC price fell below the $60,000 level, which could be a potential signal that the coins delisted from exchanges were simply bought by investors looking to benefit from the price drop.

The decline in the value of Bitcoin Exchange Reserve that has been happening over the past few months is of course a positive development for the asset as it means that there are likely fewer coins to be had, which could augment selling pressure in the market.

However, the rising price impact is not the only advantage of the cryptocurrency, as the overall downward trend of the indicator means that supply is becoming less concentrated on these platforms.

Exchanges are centralized entities and when investors deposit their coins into their associated wallets, they lose effective ownership of the coins (at least until they withdraw) and the coins themselves come under the management of the platform itself.

This means that any mishaps on the exchange, whether a hack or something else, also affect the assets of its users. As the FTX collapse in 2022 showed, major exchanges going through a disruption can also destabilize the entire market.

So the smaller the amount of supply these platforms have, the smaller their impact on the sector should be. From this perspective, Bitcoin investors continuing to move their coins to self-custody is a naturally constructive development.

BTC price

At the time of writing, Bitcoin’s price is hovering around $59,800, down 2% over the past seven days.