Data from on-chain analytics firm Crypto Quant shows that exchange reserves have dropped to 2 million BTC, worth around $54.5 billion this month.

While some market participants believe that the declining amount of BTC held on addresses tied to centralized exchanges could be a sign of increased self-custody, data from on-chain analytics firm Glassnode shows that the withdrawals from exchanges are outpacing deposits at the highest rate since the collapse of crypto exchange FTX.

As of Thursday, around 58,000 BTC was being withdrawn from exchanges for every 45,000 BTC deposited.

Interestingly, Crypto Quant found that the BTC reserves on non-U.S. exchanges like Binance, OKX and Bitfinex have actually increased by more than 10% in the last year. Meanwhile, U.S.-based exchanges like Coinbase, Gemini and Kraken saw their BTC reserves decline by 30% to 50%.

Still, on-chain activity would suggest that amidst the deposits and withdrawals recorded, institutional players kept buying up large quantities of the market leading digital asset.

In its latest assessment of weekly on-chain activity, Glassnode assessed unusual exchange activity based on three ratios: the Internal Reshuffling Ratio, the Exchange Reliance Ratio and the Whale Withdrawal Ratio.

The Internal Reshuffling Ratio examines the proportion of exchange balance transacted internally over time, and could point to potential mismanagement of funds if more than 100% of the exchange balance has transacted within its cluster of addresses over a seven-day period.

The Exchange Reliance Ratio examines the degree of transfers between exchanges, with a large negative value signaling a co-dependence of liquidity between the two parties.

The Whale Withdrawal Ratio determines whether large holders of Bitcoin, known as “whales,” are increasing their rate of withdrawals.

“What we find is that through the lens of the Reshuffling Ratio, Reliance Ratio, and Whale Withdrawal Ratio, Coinbase and Binance share a relatively similar and unalarming overall on-chain footprint,” wrote Glassnode.     

“For Huobi, the persistent decline in their exchange balance across the four major assets BTC, ETH, USDT and USDC will have an amplifying effect on these metrics, however it does suggest that a degree of caution may be warranted.”