@gemmamartin
Falling exchange reserves—systematic withdrawals from exchange wallets—often indicate increased long-term holding or off-exchange custody buildup, which can tighten available sell-side liquidity and be bullish. However, decreasing reserves are not a standalone trigger for bull markets; they must be reconciled with demand-side metrics. If withdrawals occur alongside rising spot buying, increasing on-chain activity, and improving macro liquidity, the combination can foreshadow sustained rallies. Alternatively, reserve declines driven by custodial consolidation or off-chain transfers to OTC desks without immediate spot demand may not support price. Effective interpretation integrates reserve trends with exchange inflows, funding rates, and trade volumes to distinguish accumulation from liquidity engineering.
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