Key Insights
Bitcoin’s supply on exchanges has fallen below 15% for the first time since 2018, signaling potential shifts in the market. As both exchange supply and over-the-counter (OTC) balances diminish, analysts are pointing to a “supply shock” and a trend towards long-term accumulation. To maintain upward momentum, Bitcoin’s price needs to stay above the critical threshold of $100,000.
BTC Exchange Supply Hits Seven-Year Low
The percentage of Bitcoin (BTC) available on exchanges has dropped to its lowest point in nearly seven years, now standing at 14.5%, according to data from Glassnode. This decline marks the first time since August 2018 that such a low percentage has been recorded. The decreasing supply of Bitcoin on exchanges could indicate an impending price surge, often referred to as a “supply shock,” which occurs when strong demand from buyers meets a dwindling supply of BTC.
This trend typically reflects increasing investor confidence and a pivot towards long-term holding strategies. When Bitcoin is moved to cold storage or self-custody wallets, it reduces the amount available for trading, thereby tightening supply. Additionally, large investors, commonly known as “whales,” frequently withdraw Bitcoin after purchases, indicating ongoing accumulation. With fewer coins up for sale, the pressure to sell in the short term diminishes.
OTC Bitcoin Balances Reach Historic Lows
Over-the-counter (OTC) desks, which facilitate large-scale private transactions of cryptocurrencies, are also witnessing a significant decrease in supply. These desks typically connect buyers and sellers while relying on adequate BTC reserves for prompt and efficient trade execution. Currently, the total balance of Bitcoin held in recognized OTC addresses has plummeted to historic lows. According to CryptoQuant data, there has been a 21% drop in balances associated with miners since January, bringing the total down to an unprecedented 155,472 BTC. This data excludes miners and centralized exchanges, highlighting a true scarcity in the market.
The tightening supply on both exchanges and OTC desks could lead to amplified price increases as demand surpasses available supply. “The Bitcoin balance available OTC is in a steep decline,” noted Crypto Chiefs in a recent post on X, indicating that this divergence between balance and price is unprecedented, showcasing a notable supply issue.
Bitcoin’s Strength Amid Institutional Demand
Bitcoin has shown resilience, remaining above the significant psychological support level of $100,000, a mark it has maintained since May 28, despite a recent 2.85% drop over the last couple of days. This stability is attributed to “strong institutional demand” and a shrinking supply, as pointed out by Lau, the founder of Focusw3b Agency.
This demand is prominently reflected in the inflows to spot Bitcoin ETFs, which have seen 15 consecutive days of incoming capital. Data from SoSoValue reveals that this streak began on June 9, accumulating over $386 million, followed by an additional $102 million on the subsequent Monday. In total, over $4.7 billion has flowed into spot Bitcoin ETFs in the past 15 days, showcasing robust investor interest.
Maintaining the $100,000 psychological support level is crucial for Bitcoin to secure its upward trajectory and avoid significant downturns. A dip below this threshold could trigger liquidations amounting to over $6.42 billion in leveraged long positions across various exchanges, as indicated by CoinGlass data.
Several analysts are expressing optimism regarding Bitcoin’s future, suggesting that the likelihood of it dropping below $100,000 is decreasing. Projections for 2025 are bullish, with targets set between $140,000 and over $200,000.
Disclaimer
This article is not intended to serve as investment advice or recommendations. Every investment and trading decision carries inherent risks, and readers are encouraged to conduct their own thorough research before making any decisions.
