Bitcoin Supply on Exchanges Drops to 7-Year Low at 14.5%

Bitcoin's supply on exchanges has reached its lowest point in nearly seven years, dropping to 14.5%. This significant decrease indicates a notable shift in investor behavior, as more investors are choosing to hold onto their Bitcoin rather than sell. This trend suggests that investors are increasingly viewing Bitcoin as a long-term asset rather than a short-term speculative investment. The reduction in supply on exchanges implies that there is less Bitcoin available for immediate trading, which could potentially drive up the price if demand remains steady or increases.

Despite Bitcoin dipping to $99,000 during geopolitical tensions, the $98,300 short-term cost basis held strong—setting up a rebound to $107,000 after a cease-fire, a move analysts call a bullish signal. With the MVRV ratio showing a 125% average paper profit, many might expect sell pressure—but realized gains have been muted, averaging just $872 million per day. That’s far below peak profit-taking seen earlier this year. This indicates that investors are not rushing to sell their Bitcoin, even with significant paper profits, further reinforcing the trend of holding onto the asset.

Glassnode data shows long-term conviction is growing. Dormant coins—those untouched for over 155 days—hit a record 14.7 million BTC, and their “liveliness” metric continues to fall, signaling a shift toward long-term holding over trading. Wallets that bought during Bitcoin’s January breakout above $100,000 continue to sit on their holdings, reinforcing the broader trend of investor patience. This data suggests that investors are increasingly viewing Bitcoin as a store of value, rather than a speculative asset.

On the institutional side, capital flows into spot Bitcoin ETFs remain strong, with a seven-day average of $298 million in net inflows. Combined with stablecoin reserves near their baseline, this suggests a healthy balance of buying power and liquidity. Analysts note that stablecoin capital has steadily rotated into major assets over the past month, pointing to sustained institutional engagement. This indicates that institutional investors are continuing to invest in Bitcoin, further tightening the supply and potentially driving up the price.

The apparent demand metric for Bitcoin turned negative, signaling a decrease in buying pressure. This metric, which measures the difference between the amount of Bitcoin being bought and sold, highlights a potential waning interest in purchasing Bitcoin. Despite this, Bitcoin's price has remained above $107,000, indicating that the market is still bullish on the cryptocurrency. The long-term trend for Bitcoin remains positive, with the price trading in a tight range between $104,000 and $110,000. Both bulls and bears are waiting for a clear signal to make their next move, but the overall sentiment suggests that investors are optimistic about Bitcoin's future.

Unless a fresh rally incentivizes profit-taking, analysts believe supply will remain tight. With most existing holders reluctant to sell and ETF demand holding firm, the next price surge could trigger the next phase of Bitcoin’s market cycle. This suggests that the current trend of holding onto Bitcoin is likely to continue, further tightening the supply and potentially driving up the price in the future.