Bitcoin Supply Drops 30% as ETFs and Governments Hoard

Bitcoin's price is at a critical juncture, with a potential catalyst being a supply contraction that the market has never experienced before. According to Sygnum's June 2025 outlook, the liquid supply of Bitcoin has decreased by 30% over the past 18 months. This reduction is due to the continuous draining of coins from exchanges by spot Bitcoin ETFs, corporate treasuries, and long-term holders.

Sygnum analysts highlight a significant trend: over 1 million BTC have left exchanges since the end of 2023. The primary drivers of this trend are spot Bitcoin ETFs, which have become the "marginal buyer" of BTC, corporate purchasers, and governments showing increased interest in Bitcoin reserves. ETF inflows have reached $375 million in a single day this June, with funds like ARKB and FBTC leading the way. This hoarding is reducing the tradable float, making it more challenging for traders to access liquidity and easier for prices to surge with new demand.

Sygnum's report emphasizes that Bitcoin's rapidly diminishing liquid supply is setting the stage for demand shocks and increased volatility. Institutional demand remains strong, with Bitcoin ETFs experiencing only four days of withdrawals since April. Additionally, U.S. states like New Hampshire and Texas are enacting laws to allow Bitcoin reserves, while other regions, including Pakistan and the U.K., are exploring official BTC allocations. Although these government purchases are currently symbolic, Sygnum warns that they could become a significant driver of price increases due to the demand they inject and the signaling effect they create.

The latest halving event has cut new supply in half, coinciding with a period of increasing demand. Miners' inventories are low, and with fewer coins to sell, any purchasing urge will drive BTC prices dramatically higher. Historical data shows that when the liquid supply of Bitcoin dries up, price action can be spectacular. Past cycles have seen massive rallies following significant accumulation by institutional and long-term players. Sygnum's analysis suggests that the current setup is even more bullish, with the "whale ratio" of large holders at record lows, a traditional sign of bullish activity.

Substantial demand could have a large multiplier effect, with each dollar of demand potentially causing $20-30 of added market capitalization, according to Sygnum's research head, Katalin Tischhauser. Several factors could push BTC over $110K, including ETF inflows, government reserves, safe-haven demand, and the halving lag. As pensions and funds increasingly invest in Bitcoin, even modest amounts could trigger significant price action. The signaling effect of governments or states buying Bitcoin could cause fear of missing out (FOMO). With dollar vulnerability and U.S. Treasury unsafety, investors are seeking refuge in gold and Bitcoin. The full impact of April's halving may not be realized for several months, but the potential for a demand shock multiplier remains elevated.

Crypto Twitter is buzzing with speculation of a fresh "ETF-driven supercycle." Specialists point to the insatiable flows of ETFs and the drying-up of exchange balances as a recipe for supply shock. Some experts predict that if this trend continues, BTC could reach $110K or even $130K. However, others warn of volatility, noting that with so little liquidity, even small sell-offs could trigger sudden dives. Despite this, the bias remains firmly to the upside. With Bitcoin supply at multi-year lows and demand on the rise, Sygnum's warning is clear: the next breakout may be closer—and more severe—than anyone can imagine.