The metric, however, no longer carries the weight that it used to, not least because supply has been low for months even as bitcoin has languished at around 50% of its peak value. The interpretation is outdated, some industry observers say, because it does not account for the rise in institutional custody. The financialization of bitcoin through alternative investment vehicles has changed the market in ways that make the indicator unreliable.
“People always used to look at low exchange supply as a clear bullish sign,” said Eneko Knorr, CEO of Stabolut, a multicurrency, yield-bearing stablecoin platform. “We’ve had this super-low supply for over a year now. The market grew up, and a lot of that crypto just moved somewhere else – like staking, DeFi protocols to earn some yield, or big institutional vaults.”
Santiment noted on X that the supply of $BTC and ether (ETH) on exchanges has dropped to the lowest since 2017 and 2015, respectively, calling it one of the crypto’s “most encouraging signals for the long term.” According to Santiment’s chart, bitcoin’s exchange supply sits at 6.6% of its total circulating supply and ether’s at 4.3%.
“Bitcoin and ethereum are showing one of crypto’s most encouraging signals for the long term: coins are staying off exchanges,” Santiment said. “That means fewer coins are immediately available to sell, even after months of volatility.”
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