According to the source, CryptoQuant data shows BTC exchange reserves continue to decline, indicating sustained net outflows from centralized exchanges (source: CryptoQuant). Shrinking on-exchange balances typically reduce immediate sell-side liquidity and can amplify price impact when order-book depth is thin, which traders should factor into execution and risk management (source: CryptoQuant; source: Kaiko). For confirmation, monitor neutral-to-positive funding with a rising spot premium over futures, growing stablecoin balances on exchanges, and subdued miner and long-term holder inflows to exchanges (source: CryptoQuant; source: Glassnode). Risk flags that would invalidate the bullish supply read include a turn to positive exchange netflows, increased miner-to-exchange transfers, and a spike in young coin spending that has preceded distribution phases in prior cycles (source: CryptoQuant; source: Glassnode).