Bitcoin Supply on Exchanges Drops 35% as Long-Term Holders Accumulate 51% Unrealized Profit

Bitcoin’s long-term holders have significantly increased their holdings, adding over $125 billion worth of Bitcoin to their wallets. This accumulation occurred primarily in the price range of $61,000 to $83,000, with an average entry price of approximately $72,000. The new cohort of long-term holders is now sitting on an average unrealized profit of 51%, indicating strong market confidence and a bullish outlook for Bitcoin’s future.

The supply of Bitcoin available on exchanges has dwindled by 35% over the past year, dropping from around 1.55 million BTC in July 2024 to just 1.01 million BTC today. This sharp decline suggests that investors are increasingly treating Bitcoin as a long-term investment rather than a speculative trading asset. The reduction in exchange balances creates a scarcity effect, potentially driving up prices due to increased demand.

Institutional buying is providing support to the market despite retail FOMO. While retail investors are showing signs of renewed speculative fever, institutional demand, as indicated by the Coinbase Premium, has been climbing. Whale activity has also picked up, supporting the case for institutional-driven price appreciation, which is typically more sustainable than retail-led pumps.

The supply squeeze is further amplified by the actions of whales, who are moving significant amounts of Bitcoin off exchanges. This behavior reduces the overall supply available for trading, creating a bullish sentiment in the market. Whales, being long-term investors, are less likely to sell their holdings in the short term, further supporting the bullish outlook.

The impact of the supply squeeze on the market is significant. As the supply of Bitcoin on exchanges decreases, the demand for the remaining coins increases, leading to higher prices. This dynamic is supported by the actions of long-term holders and whales, who are accumulating Bitcoin and removing it from exchanges. The supply squeeze creates a bullish environment, as the limited availability of Bitcoin drives up prices and increases market demand.

The current trend of long-term holders accumulating Bitcoin and the transition away from low-risk accumulation conditions indicate that the market is experiencing a supply squeeze. This phenomenon is likely to continue driving up prices in the near future, as the limited availability of Bitcoin on exchanges creates a scarcity effect, driving up demand and prices.