Table of Contents
The Bitcoin reserves on crypto exchanges have dropped to their lowest levels in three years. With only 2.5 million BTC available on trading platforms, the available supply is shrinking, while institutional demand continues to grow through Bitcoin ETFs.
This raises the question: Are we approaching a supply shock scenario? A situation where limited BTC availability collides with rising demand, potentially triggering a significant price surge.
Bitcoin Supply on Exchanges Hits Multi-Year Low
According to CryptoQuant, the total Bitcoin balance across all exchanges has fallen to just 2.5 million BTC, a level last seen in 2022.
This suggests that more investors are withdrawing their Bitcoin from exchanges, opting instead for long-term holdings in cold storage or staking services. The declining available supply could have a positive impact on price, provided demand remains stable or increases.
A shrinking supply combined with institutional interest could lead to a supply shock—a situation where demand for BTC continues to rise while the number of available coins on exchanges keeps dropping.
Historically, such scenarios have often preceded strong price surges.
Bitcoin Holds Above $95,000 Despite Selling Pressure
Bitcoin has managed to stay above the $95,000 mark over the past 24 hours, despite experiencing its highest daily selling pressure since the collapse of hedge fund Three Arrows Capital (3AC) in June 2022.
Analysts highlight that this resilience signals strong institutional interest and a reduced willingness to sell.
“The exhaustion of sellers may indicate that the market is shifting from selling pressure to buying pressure,” says Ryan Lee, Chief Analyst at Bitget Research.
He emphasizes that factors such as global economic conditions, technological advancements, and psychological support zones play a key role in Bitcoin’s price stability. However, fluctuating Bitcoin ETF inflows continue to impact price movements.
On February 10, U.S. spot Bitcoin ETFs recorded net outflows of $186 million, completely offsetting the previous day’s $171 million inflows, according to Farside Investors. This suggests that institutional capital flows remain volatile, making Bitcoin’s price trajectory unpredictable in the coming weeks.
Imminent Supply Shock Due to Declining Bitcoin Reserves
Holding the critical psychological level of $95,000 is crucial to avoid further volatility.
A drop below this level would trigger $1.52 billion in liquidations of leveraged long positions across all exchanges, according to CoinGlass. This could spark a chain reaction, forcing traders to close their positions, further intensifying downward pressure.
Long-Term Bullish Expectations Despite Short-Term Risks
Despite these short-term risks, market expectations for 2025 remain bullish.
Various analysts predict that Bitcoin could climb to $160,000 or even $180,000 in the coming months.
This would align with past bull markets, where limited BTC availability on exchanges often served as a precursor to explosive price increases.
