New data from on-chain analytics provider, Santiment, shows that the number of bitcoins held on centralized exchanges has dropped to just 6.4%, the lowest level in over five years. This indicator measures the percentage of bitcoin supply currently sitting in exchange wallets and is an important metric for understanding market trends.

The Continuing Downtrend of Bitcoin Supply on Exchanges

The decreasing trend started a few years ago as investors began transferring their coins into self-custodial wallets. However, during the latest Bitcoin bull run investors deposited more coins to exchanges to take advantage of profit-taking opportunities.

Recently though, the indicator has resumed its downward trajectory. The recent trend is linked to the negative sentiments around the market after the US SEC sued Binance and Coinbase. Investors have made large Bitcoin withdrawals, with Binance seeing a more significant drop in reserves.

While short-term changes in supply on exchanges can directly affect the asset’s price, the long-term implications are more significant. Transferring coins to self-custody is a crucial milestone for the ecosystem as it spreads the supply across different entities, making it less vulnerable to manipulation from large players.

During the Black Thursday market crash last year, almost 16% of the circulating Bitcoin supply was held on central exchanges compared to just 6.4% today.

Bitcoin Price

Bitcoin is currently trading around $25,900, which is down by 2% in the last week.