Recent data from cryptocurrency analytics firm Santiment reveals that the amount of Bitcoin and Ethereum held on centralized exchanges has dropped to historically low levels. Bitcoin's exchange supply has fallen to approximately 6.6% of its total circulating supply—the lowest since 2017—while Ethereum's has hit an all-time low of 4.3%, levels not seen since 2015.
In the past, declining exchange balances were regarded as a robust bullish indicator, suggesting that investors were moving assets to personal wallets with no intention of selling, thereby reducing liquid supply. However, market experts now argue that this interpretation is outdated. “A decrease in exchange balances can no longer be considered a standalone bullish signal,” they note, citing the evolving market structure. The rise of institutional custody services, spot Bitcoin ETFs, staking, and decentralized finance (DeFi) platforms means that funds are increasingly held outside traditional exchanges for reasons beyond mere HODLing.
Santiment itself acknowledges the shift but maintains a positive long-term outlook. It stated that the low exchange supply “reduces the risk of a major exchange-driven sell-off” and could “help create a healthier foundation for crypto’s next sustainable bull cycle.” Adding perspective, GoMining CEO Mark Zalan told Coindesk that similar lows have preceded past bull markets but cautioned that predicting the timing of a reversal solely on this metric is impossible.
