Bitcoin News Today: Institutional Investors Tighten Grip as Bitcoin Supply Squeezes Quietly

Bitcoin, the world's largest cryptocurrency by market capitalization, has retreated 10% from its peak, yet on-chain data and ETF dynamics suggest a nuanced market environment. While the price dipped from an all-time high above $124,000 to $111,360 as of the latest data, on-chain analytics indicate a tightening in Bitcoin’s available supply. The 30-day moving average of exchange inflows has fallen to its lowest level since May 2023, according to CryptoQuant. This trend implies that investors are increasingly holding Bitcoin rather than selling, reducing the pressure that typically accompanies such price corrections. Both Coinbase and Binance report historically low inflows, a sign of broader restraint in trading behavior and potentially favorable conditions for price appreciation.

The role of institutional investors in shaping Bitcoin's recent trajectory has been significant. The 30-day moving average of Bitcoin ETF inflows reached a new low in May 2023, but institutional buying has reaccelerated recently. BlackRock’s iShares Bitcoin Trust (IBIT), the largest institutional Bitcoin custodian, now holds 745,357 BTC, surpassing the combined holdings of Coinbase and Binance. This concentration of supply in regulated ETFs has reduced the availability of Bitcoin on exchanges, creating a tighter liquidity environment. ETF inflows resumed with $219 million in net inflows on August 25, led by BlackRock, Fidelity, and ARK Invest. The inflows coincided with a shift in investor sentiment from fear to greed following comments from Federal Reserve Chair Jerome Powell. This structural shift reinforces institutional control over Bitcoin liquidity and may signal a bullish supply squeeze.

In contrast, Ethereum ETFs have seen stronger inflows, with $455 million in net inflows on August 26, compared to Bitcoin’s $88 million. BlackRock’s Ethereum ETF alone absorbed $323 million, while Fidelity’s FETH added $85.5 million. The divergence in flows reflects an active rotation trade among asset managers, favoring Ethereum's yield-bearing characteristics over Bitcoin’s fixed supply model. However, despite Ethereum's short-term momentum, Bitcoin's institutional dominance remains intact, with $143 billion in ETF net assets, far exceeding Ethereum's $29.8 billion. This suggests that while Ethereum's ETFs are gaining traction, Bitcoin's structural advantages and credibility in the institutional space continue to provide a strong foundation.

The market's structural realignment extends beyond ETFs. On-chain data shows that investors are increasingly storing Bitcoin in ETFs and cold wallets rather than sending it to exchanges. This trend has been evident in the declining exchange balances of major custodians like Coinbase and Binance. Coinbase, once the largest ETH custodian with over 8 million coins in 2019, now holds only 3.8 million, down 52% in six years. This shift reflects a maturing market where regulated vehicles are supplanting exchange custody as the preferred method for institutional investors. The reduced turnover associated with ETFs and cold storage further tightens supply, amplifying the impact of incremental demand and reducing the frequency of liquidation events.

Looking ahead, some analysts suggest that Bitcoin may be entering the final phase of its current bull market. Crypto analyst Cryptobirb estimates the cycle is now 93% complete, with a potential peak expected between late October and mid-November 2025. This projection is based on historical bull run durations, halving cycles, and seasonal patterns. Previous cycles have seen peaks 366 to 548 days after halving events, and with the most recent halving in April 2024, the calculated window falls between October 19 and November 20. Technical indicators remain supportive, as Bitcoin trades above key moving averages, and on-chain data shows no signs of miner capitulation. However, past bull markets have been followed by year-long bear cycles with steep corrections, highlighting the importance of caution despite the current optimism.

The recent market dynamics underscore a complex interplay of supply-side constraints, institutional adoption, and shifting investor sentiment. While Bitcoin’s price has retreated from its highs, the underlying fundamentals suggest a resilient market structure. The convergence of low exchange inflows, ETF dominance, and institutional confidence points to a potential continuation of upward momentum, especially if macroeconomic conditions remain favorable. However, the risk of Ethereum’s ETF momentum temporarily diverting capital remains a factor to monitor. In this evolving landscape, Bitcoin’s role as a store of value and its institutional adoption appear to reinforce its long-term bullish potential.

Source: [1] Coinbase and Binance Reveal Bitcoin Inflows at Historic ... (https://cryptopotato.com/coinbase-and-binance-reveal-bitcoin-inflows-at-historic-lows-heres-why-it-matters/) [2] Bitcoin ETF Inflows: BTC-USD Rebounds to $111K as ... (https://www.tradingnews.com/news/bitcoin-etf-inflows-btc-usd-recovers-to-111k-usd) [3] Crypto ETPs post $1.4B losses amid recent Bitcoin, Ether ... (https://cointelegraph.com/news/crypto-funds-1-4-billion-outflows-bitcoin-ethereum) [4] Bitcoin Price, BTC Price, Live Charts, and Marketcap (https://www.coinbase.com/en-gb/price/bitcoin) [5] Bitcoin Price, BTC Price, Live Charts, and Marketcap (https://www.coinbase.com/en-ca/price/bitcoin)