Imagine a small town with a central marketplace where residents can trade goods.

When townspeople keep their valuables at home, it suggests they’re content with what they own. But when many start bringing their items to the marketplace, it indicates they’re ready to sell.

Marketplace

Similarly, in the crypto market, when coins move to or from exchanges, it reveals investor sentiment and potential market direction.

📖 What is Percent Balance on Exchanges?

This metric tracks the percentage of the total circulating Bitcoin supply that is held in wallets controlled by centralized exchanges.

How It Works

  • Calculation: The metric is calculated by dividing the amount of bitcoin held in exchange wallets by the total circulating supply of Bitcoin, then expressing this as a percentage.
  • Exchange Wallets: These are wallets managed by exchanges, which hold bitcoin deposited by users for trading, as well as reserves held by the exchange itself.
  • Circulating Supply: This refers to all bitcoin that has been mined and is available in the market (excluding lost or inaccessible coins).

Example:

If 2 million bitcoins are held on exchanges and the total circulating supply is 19 million, the percent balance on exchanges would be:

Percent Balance on Exchanges = (2,000,000 / 19,000,000) × 100 ≈ 10.5%

🔍 How to Read the Chart

BTC: Percent Balance on Exchanges

This chart, titled “BTC: Percent Balance on Exchanges” compares:

  • 🟠 Orange Line: % of BTC supply held on all exchanges
  • ⚫ Black Line: BTC Price in USD

What does it mean?

  • A rising orange line means more BTC is being deposited into exchanges.
  • A falling orange line means BTC is being withdrawn from exchanges, usually to cold storage or self-custody.

📈 Interpreting the Chart

  • Since early 2022, there’s been a clear downward trend in the % of BTC held on exchanges – from ~17.7% to under 14% as of May 2025.
  • This decline accelerates sharply during late 2022 and again in 2024-2025, signaling strong withdrawal behavior even as BTC price surges past $100,000.
  • Historically, peaks in exchange balance have aligned with price tops, while declines have supported bullish trends.

How It’s Used

  1. Bullish Signals: Decreasing balance percentages suggest accumulation and long-term holding, reducing the risk of large sell-offs.
  2. Bearish Signals: Increasing balance percentages indicate more coins are ready to be sold, which can increase selling pressure and lead to price declines.
  3. Market Cycle Analysis: During bull markets, the percentage typically falls as investors withdraw coins. In bear markets, it often rises as holders move coins to exchanges to sell.

🧠 Why Traders Care

  • Rising Percent: If the percentage increases, it often suggests that more holders are moving their bitcoin to exchanges, possibly to sell.
    • An increasing balance can be bearish, signaling incoming sell-offs or distribution (institutional investors or large market participants offload their positions).
    • Large inflows to exchanges can precede price drops as more coins become available to sell.
  • Falling Percent: If the percentage decreases, it means more bitcoin is being withdrawn from exchanges into personal wallets, suggesting holders are less likely to sell in the short term.
    • This is often seen as a bullish signal, reflecting accumulation and long-term holding.

🟠 Summary Table

Percent Balance on Exchanges is a metric that measures what proportion of the total circulating supply of Bitcoin is currently held in wallets controlled by centralized cryptocurrency exchanges.

Trend Direction Interpretation Potential Signal
Rising % on Exchanges Coins flowing into exchanges Possible distribution / sell pressure
Falling % on Exchanges Coins being withdrawn from exchanges Accumulation / bullish
Sharp drop Aggressive cold storage or supply crunch Bullish structural shift