Exchange Supply Depletion

Definition ∞ Exchange supply depletion signifies a reduction in the amount of a digital asset held on cryptocurrency exchanges. This on-chain metric indicates that a substantial quantity of coins is being moved off exchanges into private wallets or other custodial solutions. Such a trend suggests a preference for long-term holding rather than immediate selling, thereby reducing the readily available supply for trading. A sustained depletion often signals bullish sentiment and potential future price appreciation due to reduced selling pressure.
Context ∞ News often reports on exchange supply depletion as a significant indicator of market sentiment, particularly for assets like Bitcoin. A consistent decrease in exchange balances can precede upward price movements, as less supply on exchanges implies fewer coins are available for sale. This metric provides a valuable lens for understanding the intentions of market participants and predicting market direction.