Recently, there has been a trend towards Bitcoin holders moving their assets away from the exchanges, with some exchanges hit particularly hard. For instance, the amount of Bitcoin held by BitMex and Bitfinex has dropped significantly in the last few weeks.
But while the amount of Bitcoin held on exchanges has decreased overall, it has not reverted as far back in history as the number of BTC transfers to exchanges. Its current level is equivalent to the middle of 2019.
This can be partially explained by the fact that the number of exchange withdrawals has also decreased although at a more gradual pace.
Another reason is that while the number of transfers to exchanges has decreased significantly, the volume of Bitcoin inflows to exchanges has stayed at a relatively high level which indicates that the average size of a Bitcoin deposit has increased.
It seems unlikely that the latest trend will reverse anytime soon since there is a general expectation that the upcoming halving of the Bitcoin block reward will have a positive impact on the price. Thus, most traders and investors may prefer to keep their assets off of the exchanges for better safekeeping.