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According to new on-chain data, the amount of Bitcoin held on cryptocurrency exchanges has plummeted to its lowest level since late 2017.
The yellow trendline tracks the percentage of Bitcoin's total circulating supply sitting in known exchange wallets.
After peaking in early 2020, this metric has been in a relentless macro downtrend.
Investors have spent the last six years consistently pulling their assets offline.
A dotted horizontal line on the chart traces the current supply ratio all the way back to November 2017.
The fact that exchange supplies are at an eight-year low can be attributed to several factors.
Following the approval of spot Bitcoin ETFs in 2024 and expanding institutional adoption, massive amounts of Bitcoin are now being scooped up and locked away in enterprise-grade custody solutions (like Coinbase Prime or Fidelity).
The exchanges like FTX and Celsius also strengthened the "not your keys, not your coins" ethos. Retail investors and whales alike are increasingly moving their holdings to cold storage hardware wallets.
A supply shock?
When the percentage of supply on exchanges is low, it means the order books are "thin."
If a sudden surge in macroeconomic demand hits the market, there are simply fewer sellers available on exchanges to absorb that demand.
Even moderate buying pressure can trigger substantial upside price volatility In a low-liquidity environment.
According to CoinGecko data, Bitcoin is currently changing hands at $71,476. The leading cryptocurrency is still down 43.3% from its record high.