Bitcoin Supply on Exchanges Drops to 14.5% Amid Institutional Demand Surge

Bitcoin’s supply on exchanges has dropped below 15% for the first time since 2018, indicating a potential supply shock as institutional demand from exchange-traded funds (ETFs) continues to grow. This significant reduction in the percentage of Bitcoin available on exchanges, now at 14.5%, suggests a shift towards long-term holding and accumulation. The trend of diminishing Bitcoin supply on exchanges typically signals rising investor confidence, with coins being transferred to cold storage or self-custody wallets, thereby reducing the liquid supply available for trading. This behavior is often observed among whales, who frequently withdraw Bitcoin after purchasing, signaling ongoing accumulation and diminishing short-term sell pressure.

Over-the-counter (OTC) desks, which facilitate large, private cryptocurrency trades, are also experiencing a tightening supply. The cumulative balance of Bitcoin held in known OTC addresses has reached historic lows, with a 21% decline in OTC address balances linked to miners since January. This data reflects inflows from over two unique “1-hop” addresses tied to mining pools, excluding miners and centralized exchange addresses. The increasing scarcity of Bitcoin on exchanges and OTC desks can amplify price surges as demand outstrips supply, creating a supply problem that could drive prices higher.

Bitcoin’s resilience above the $100,000 psychological support level is backed by strong institutional demand. This demand is evident in spot Bitcoin ETF inflows, which have recorded 15 days of consecutive inflows. Over $4.7 billion in capital moved into spot Bitcoin ETFs over the past 15 days, highlighting the growing institutional interest in Bitcoin. Maintaining the $100,000 psychological support will be critical for securing Bitcoin’s upside and avoiding significant downside volatility. A potential correction below $100,000 would liquidate over $6.42 billion worth of cumulative leveraged long positions across all exchanges, underscoring the importance of this support level. Numerous analysts predict that Bitcoin dropping below $100,000 is becoming less likely, setting optimistic targets for the rest of 2025 ranging from $140,000 to above $200,000.