Exchanges are suppressing the price of BTC through paper Bitcoin, in the same way that paper gold suppresses the price of gold. In other words, exchanges have created more claims to Bitcoin than the 21 million -- probably about 90% more than the 21 million (~= 39.89 million BTC).

I think this is why the State has not shutdown exchanges for openly buying/selling unregistered securities. The exchanges are temporarily helping the State against Bitcoin. Even when a crypto ponzi scheme collapses (Terra, FTX, etc), they suppress the price of Bitcoin for a little while, because they (and anyone else that gets liquidated) are forced to sell their BTC at lower prices to pay their debts.

The irony is that the price suppression is good for Bitcoin adoption in the long-run. Weak hands buy BTC and when their arrogance comes home to roost, they sell it all to stronger hands at a reduced price, which allows hodlers to stack sats at momentarily cheaper prices.