Bitcoin News Today: Bitcoin's Shrinking Supply and ETF Surge Create Perfect Storm for $125K High

Bitcoin's price has surged past $125,000, reaching a new all-time high, as exchange reserves hit a seven-year low, signaling a potential supply crunch and renewed institutional demand. On-chain data from platforms like Glassnode and CryptoQuant reveal that Bitcoin held on centralized exchanges has dwindled to 2.45–2.83 million BTC, the lowest level since 2019. This decline reflects a shift toward long-term self-custody and institutional accumulation, with over 170,000 BTC withdrawn from exchanges in the past month alone. Analysts attribute the tightening supply to reduced miner issuance, increased ETF activity, and a growing preference for cold storage among large holders.

The shrinking liquidity on exchanges has amplified price sensitivity, with analysts noting that even modest demand could trigger sharp rallies. Historical patterns suggest that low exchange reserves often precede significant price surges, as seen in 2017, 2021, and now 2025. Institutional demand, particularly from Bitcoin ETFs, has further exacerbated the supply squeeze. U.S. spot Bitcoin ETFs recorded $3.24 billion in inflows last week, surpassing the $186 million net outflow on February 10, which analysts describe as a temporary market correction rather than a trend reversal. The ETF inflows have outpaced mining production, with ETF holdings now exceeding Satoshi Nakamoto's estimated holdings.

Technical indicators reinforce a bullish outlook. Bitcoin's price has remained above $122,000 for over a week, consolidating gains after a 14% surge in October. The 50-day and 100-day moving averages now align with the upward trend, while the Average Directional Index (ADX) near 30 underscores strengthening momentum. J.P. Morgan analysts have raised their price target to $165,000, citing Bitcoin's undervaluation relative to gold and its role as a hedge against fiat erosion. The correlation between Bitcoin and gold has climbed to 0.82, the highest in five years, as both assets benefit from weak currency credibility and geopolitical instability.

However, thin liquidity and reduced exchange balances pose risks. VanEck's Matthew Sigel warns that spot liquidity could be exhausted within hours if prices remain near $125,000. Retail investors have capitulated, with trading volumes on major exchanges like Binance dropping 40% in February 2025. The Crypto Fear & Greed Index hit 23, indicating extreme bearish sentiment, while on-chain metrics like the MVRV ratio suggest Bitcoin is undervalued at 0.8. Despite this, market participants remain cautious, with the RSI at 35 signaling an oversold condition that could prompt a rebound.

The macroeconomic backdrop supports further gains. The Federal Reserve's rate-cut cycle has boosted risk assets, with 96% odds of another 25-basis-point cut in October 2025. Bitcoin's market capitalization now exceeds $2.5 trillion, surpassing Amazon and nearing silver's valuation. Institutional adoption continues to accelerate, with BlackRock's IBIT ETF surpassing $90 billion in assets. However, analysts caution that a failure to hold above $122,000 could trigger a short-term correction toward $120,000, testing key support levels before resuming the upward trajectory.

In summary, Bitcoin's current dynamics-driven by dwindling exchange reserves, robust ETF inflows, and macroeconomic tailwinds-suggest a strong case for a breakout toward $130,000 and beyond. While volatility remains a risk, the structural supply constraints and institutional demand create a favorable environment for sustained appreciation.