The amount of Bitcoin (BTC) held on exchanges has been declining steadily since mid-May, offering reassurance that the worst of the market selloff has passed. 

At current levels, Bitcoin’s exchange supply is at its lowest level since early January, according to crypto analytics firm Santiment. “The 6-month low is a promising sign, as it generally will indicate that there is a decreased risk of more major $BTC selloffs,” the analytics firm tweeted Monday morning.

Exchange inflows began to spike in early May, which likely served as a precursor to Bitcoin’s steep selloff through the middle of the month. The Bitcoin selloff intensified on May 19, culminating in a $1.2 trillion decline for the entire cryptocurrency market.

Exchange-flow data is an important metric for monitoring Bitcoin’s price trajectory in the short to medium terms. Net inflows often foretell a steep selloff as more investors transfer their holdings from cold wallets, possibly for the purpose of selling. Case in point: In May, Bitcoin experienced the biggest exchange inflows since the March 2020 COVID-19-related crash.

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While Bitcoin remains in a firm intermediate downtrend, investors are finding more reasons to be bullish. The speed of adoption in places like Latin America, an anticipated shift in mining from China to other regions and growing indications that the market has bottomed are all causes for optimism.

On the flip side, analysts continue to warn of an uncertain outlook in the short term, with several prominent industry voices calling for a steeper correction this year.