“The under-covered angle is that this metric is documenting the end of the exchange-custody era,” Ben Nadareski, CEO of Solstice, said. The bigger story may not be lower exchange balances themselves, but where those assets are moving to.

“Assets are leaving trading venues for two destinations: regulated custody on one side, productive onchain positions on the other,” he said.

Moreover, the argument that bull runs always follow a steady decline in exchange balance is not necessarily true. For instance, in 2022, the supply on exchanges remained low, yet prices crashed hard.

HODLing is real

While the indicator may not be as dependable as before, it doesn’t change the fact that BTC is being accumulated by a variety of market participants in anticipation of a price increase.

“Over 130 public companies now hold bitcoin on their balance sheets, and spot ETFs have absorbed a growing share into regulated custody,” Zalan said.

According to Bitcoin Treasuries, public companies hold about 1,264,579 BTC, private ones 281,752, government entities 649,954, DeFi and other protocols 369,595, while ETFs and exchanges have 1,622,533. Its data also shows treasury companies hold about 7.252 million ETH.

Combined with nearly 7 million bitcoin in dormant wallets, a total of just under 11.2 million bitcoin sits outside active trade, which is about 56.5% of the currently circulating supply of roughly 20.05 million.