Exchange Outflow

Definition ∞ Exchange outflow refers to the movement of digital assets from centralized cryptocurrency exchanges to external wallets. A significant outflow often suggests that holders intend to retain their assets for a longer duration, possibly for self-custody or participation in decentralized finance activities. This trend can indicate a reduction in immediate selling pressure and a strengthening of investor confidence. It serves as a metric for assessing market sentiment.
Context ∞ The current discussion on exchange outflow frequently analyzes its correlation with price movements and market sentiment in the cryptocurrency space. A key debate exists around distinguishing between outflows for long-term holding versus those for immediate deployment into decentralized applications or other platforms. Observing sustained exchange outflows can provide context for anticipating potential supply shortages on exchanges, which might precede upward price momentum for specific digital assets.