What this chart shows
This page divides the BTC balance sitting on addresses Coin Metrics tags as belonging to known exchanges by the total circulating supply, tracking what share of all existing Bitcoin is currently held in a readily-sellable position.
Unlike the Netflow page, which measures the daily rate of coins moving on and off exchanges, this page measures the accumulated level — the stock that results from years of those flows netting out one way or the other.
How to read it
A falling share means, in aggregate, more coins have moved off exchanges than on over time — consistent with a growing portion of supply becoming illiquid, held in self-custody rather than sitting ready for sale. A rising share means the opposite. Because this is a slow-moving stock rather than a daily flow, look at the multi-month trend rather than any single day.
Limitations
This inherits the same exchange-tagging limitations as the Netflow page: new or unlabeled exchange wallets, cold-storage rotations, and internal transfers all introduce noise into what counts as "on an exchange."
A coin sitting on an exchange isn't necessarily for sale — some holders park long-term balances on exchanges for convenience or to earn yield products, which this metric can't distinguish from short-term trading inventory.
Custodial products like ETFs hold enormous amounts of Bitcoin in wallets that aren't tagged as "exchanges" by this metric, even though the effect on freely-tradable float may be similar. This share can look low even as coins concentrate in other illiquid custodial structures.