The supply of Bitcoin ($BTC ) on trading platforms has dropped to its lowest level in eight years.

According to new data from the blockchain, the amount of Bitcoin traded on exchanges has fallen to its lowest level since late 2017.

This is significant because assets on exchanges are usually the most liquid, meaning the Bitcoins most likely to be sold.

But the current situation is the exact opposite.

Investors have spent the last few years withdrawing Bitcoin from exchanges to cold wallets or institutional custody services, reducing the amount of Bitcoin available for immediate sale.

There are several factors behind this:

📊 Bitcoin exchange-traded funds (ETFs) are absorbing the supply

📊 Growth of institutional custody solutions

📊 The shift to the principle "Not your keys, not your coins" after previous exchange failures.

The result: a decrease in Bitcoin liquidity in the market, and historically, when exchange supply declines for extended periods, it often leads to a tightening of selling side liquidity during bull markets.