Bitcoin's on-chain metrics are painting an interesting picture right now. Exchange balances have been steadily declining—a pattern that typically signals accumulation rather than distribution.

What's happening here? Large holders are pulling coins away from exchanges and moving them into cold storage or personal wallets. This shift matters because it shrinks the liquid supply available on the market.

Meanwhile, demand hasn't let up. So you've got this widening gap: fewer coins ready to trade, but buyers still active. That's textbook supply pressure building.

When liquid supply gets tight enough while demand stays constant or grows, you get what traders call a supply shock. The math is straightforward—less available inventory tends to push price discovery upward. Whether this actually plays out depends on how quickly the supply squeeze tightens and whether buying pressure sustains.