Definition ∞ Exchange reserves tightening describes a reduction in the total amount of a specific cryptocurrency held by centralized exchanges. This trend indicates that a greater proportion of the asset’s supply is moving off exchanges and into private wallets or decentralized finance (DeFi) protocols. Such a movement often signals a decreased immediate selling pressure, as coins held in personal wallets are typically intended for long-term holding or utility rather than quick liquidation. It can reflect a bullish sentiment among market participants.
Context ∞ Cryptocurrency news frequently reports on exchange reserves tightening as a key indicator of market supply dynamics and investor confidence. A sustained reduction in exchange holdings is often interpreted as a positive signal for future price appreciation due to a diminishing readily available supply for sale. Conversely, an increase in exchange reserves might suggest a potential for increased selling pressure.
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