Bitcoin’s on-chain transfer volume grew considerably over the past month, ultimately hitting a 1-year high of 3.2 million BTC on September 9. At the same time, visible on-chain exchange activity has been dropping; only 3.6% or 115,000 BTC were transacted via trading platforms on the day.
Bitcoin on-chain transfer volume. Source: Glassnode.
Bitcoin fund flow ratio. Source: CryptoQuant.
This does not necessarily mean that the exchange trading volume has declined, as trading on centralized exchanges almost always happens off-chain — if anything, it has gone up.
Bitcoin exchange trading volume. Source: Kaiko.
Most on-chain activity is registered on centralized exchanges when users deposit or withdraw funds. Thus, this trend may actually indicate that users are choosing to move their assets back and forth less often.
Since the growth of Bitcoin's on-chain transfer volume is likely not caused by exchange activity, it is possible that it stems from greater adoption of the asset in the economy. The last time this metric was higher was August 21, 2020, when it appeared to spike to almost 25 million BTC. This seems to have been anomalous though, as we have no way of knowing exactly what caused it.