Bitcoin News Today: Bitcoin Faces 2.5% Weekly Decline Amid Rising Exchange Reserves

Bitcoin is currently facing a potential short-term correction phase, as indicated by various on-chain and market sentiment indicators. Despite the overall bullish trend, these indicators are flashing caution. Bitcoin reserves on centralized exchanges have risen to their highest level since June 25, reflecting ongoing profit-taking by investors. This increase in exchange balances suggests a higher supply of BTC that could potentially be sold, which has historically preceded market declines or periods of price consolidation, especially when buy-side momentum is waning.

Darkfost, a CryptoQuant contributor, noted a significant increase in BTC whale inflows to exchanges, further supporting the cautious outlook. The inflows, averaged monthly to smooth out short-term volatility, increased by almost $17 billion, from $28 billion to $45 billion between July 14 and 18. Similar trends were observed during past local peaks, when monthly whale inflows exceeded $75 billion before leading to more significant corrections.

The overall upward pressure from whales trying to secure profits remains a risk factor, even though daily inflow volumes have since decreased. However, there is still a strong sense of optimism in the market. CryptoQuant’s Bitcoin Bull Score Index is currently at 80, indicating a very bullish phase. But there’s also a chance of overheating with such high optimism. In the past, excessive greed has led to higher volatility as traders reduce positions and take profits, particularly after an all-time high.

At the time of reporting, Bitcoin was trading at $118,307, up 0.4% in the past 24 hours after retreating from a record high of $122,838 set on July 22. The asset is down 2.5% over the past week but remains up 14% over the last 30 days. On the technical side, the daily chart shows short-term fatigue. Bitcoin is trading near the middle of the Bollinger Bands, with the lower band at $105,383 and the upper band at $123,522. The price’s consolidation at $114,453, just above the 20-day simple moving average, suggests a potential support test.

Volume has declined relative to recent highs, which is consistent with the ongoing profit-taking narrative. At 68.11, the relative strength index is just below the overbought level, indicating that momentum is cooling off even though it’s still positive. If Bitcoin closes below the 20-day SMA and the mid-Bollinger band, it might decline further toward the lower band around $105K. On the upside, a fresh breakout above $122,000 would probably invalidate the bearish theory and confirm that the upward trend is still in place.

The rising exchange reserves are another factor contributing to the risk of a pullback. As more Bitcoin is held on exchanges, it increases the likelihood of selling pressure, as these reserves can be easily liquidated. This dynamic is particularly concerning given the recent high-profile security breaches that have rocked the cryptocurrency world. In July 2025, several exchanges, including Bybit, BigONE, and CoinDCX, suffered significant financial setbacks due to sophisticated cyberattacks. These breaches not only resulted in substantial losses but also highlighted the vulnerabilities of centralized exchanges.

The breaches of July 2025 have raised urgent questions about the long-term viability of centralized exchanges. The vulnerabilities exposed by these incidents are not isolated but indicative of a deeper systemic issue. Centralized exchanges remain attractive targets for state-sponsored actors, hacktivists, and opportunistic cybercriminals. The political dimensions of these attacks were evident in the Nobitex incident, where anti-government messages were embedded in the transaction trails of stolen funds.

The systemic risks extend beyond individual breaches. When a major exchange collapses, the ripple effects are felt across the entire market. The 2024 DMM Bitcoin hack, which drained $305 million, triggered a 24% drop in Ethereum and a cascading sell-off of Bitcoin. Such volatility is exacerbated by the lack of standardized insurance mechanisms for user funds and the absence of a unified global regulatory framework. In a world where crypto is increasingly integrated into traditional finance, these vulnerabilities pose a direct threat to broader financial stability.

For investors, the implications are stark. Centralized exchanges are no longer low-risk custodians of digital assets; they are high-stakes battlegrounds where security lapses can lead to catastrophic losses. The data from Chainalysis underscores this reality: 23.35% of stolen funds in 2025 originated from personal wallet compromises, a trend linked to rising “wrench attacks”—physical coercion against crypto holders. These developments force a critical question: Should investors continue to trust centralized platforms with their assets, or is the future of crypto custody in decentralized, self-sovereign models?

The answer lies in a nuanced strategy. While centralized exchanges will likely persist—given their convenience and liquidity—investors must demand stronger safeguards. Exchanges that implement multi-signature hot wallets, real-time proof-of-reserves audits, and robust insurance mechanisms will be better positioned to survive. Conversely, platforms that fail to adapt to the new risk landscape will face existential threats, as seen in the collapse of sanctioned exchanges like Garantex and the potential designation of Huione Group by FinCEN.

For long-term investors, diversification is key. Allocating a portion of crypto holdings to decentralized platforms or hardware wallets can mitigate the risks of centralized custody. Additionally, supporting regulatory frameworks that prioritize transparency can help rebuild trust in the ecosystem. Meanwhile, institutional investors should scrutinize the security protocols of any centralized exchange they partner with, ensuring compliance with emerging standards.

The road ahead for centralized exchanges is fraught with challenges. The cost of on-chain transaction premiums has surged by 108% since 2022, reflecting the premium threat actors now pay for speed and finality in laundering stolen assets. Yet this also highlights an opportunity: the same transparency that enables crime can empower regulators and investors to track and mitigate risks. The industry's ability to innovate—whether through advanced encryption, AI-driven threat detection, or hybrid custody models—will determine whether centralized exchanges can adapt or face obsolescence.

In the end, the viability of centralized exchanges hinges on their capacity to learn from the past. The breaches of 2025 are not just cautionary tales but blueprints for reform. For investors, the message is clear: security is no longer an afterthought but the foundation of value. Those who recognize this and act accordingly will not only protect their assets but also shape the future of a market that, for all its turbulence, remains a cornerstone of the digital economy.