Bitcoin (BTC) reserves on exchanges have fallen below 15%, signaling a significant supply shock driven by increasing institutional demand for ETFs. According to data from Glassnode, the percentage of Bitcoin supply held on exchanges has dropped to approximately 14.5%, marking a seven-year low not seen since August 2018.
This sharp decline in exchange reserves often indicates an upcoming price surge due to a "supply shock." This phenomenon occurs when strong buying demand meets a reduced availability of Bitcoin. Such a trend typically reflects growing investor confidence and a shift toward long-term holding strategies.
Investors frequently move BTC to cold wallets or self-custodied wallets, reducing the liquid supply available for trading. Large holders, often referred to as whales, tend to withdraw BTC after purchases, signaling accumulation. With fewer BTC available for sale, short-term selling pressure is likely to diminish.
OTC Bitcoin Balances Hit Record Lows
Over-the-counter (OTC) trading platforms, which facilitate large, private cryptocurrency transactions, are also experiencing tightening supply conditions. These platforms rely on maintaining sufficient Bitcoin reserves to execute trades quickly and reliably.
The total BTC balance in OTC addresses has reached an all-time low (ATL). Data from CryptoQuant shows that since January, BTC balances in miner-linked OTC addresses have decreased by 21%, now standing at 155,472 BTC.
Scarcity on both exchanges and OTC platforms could intensify price increases as demand continues to outpace supply. As noted in a recent social media post by Crypto Chiefs, "Available Bitcoin balances on OTC desks are plummeting. We’ve never seen such a large gap between balance and price! People are seeing supply issues happening."
Bitcoin Stability Supported by Strong Institutional Demand
Despite a minor 2.85% decline over the past two days, Bitcoin has maintained its position above the critical $100,000 psychological support level since May 28. Theo Lau, founder of Focusw3b Institutional, attributes this resilience to "strong institutional demand" and "dwindling" supply.
This demand is most visible in the consistent inflows into spot Bitcoin ETFs, which have recorded positive inflows for 15 consecutive days. A report from SoSoValue indicates that this growth began on June 9 with over $386 million in inflows and continued through Monday with an additional $102 million. Over the past 15 days, a total of more than $4.7 billion has flowed into spot Bitcoin ETFs.
Maintaining the $100,000 support level is crucial for sustaining Bitcoin’s upward momentum and avoiding significant declines. Data from CoinGlass suggests that a potential drop below $100,000 could trigger the liquidation of leveraged long positions totaling over $6.42 billion across all exchanges.
Many analysts believe that Bitcoin is unlikely to fall below $100,000 and have set optimistic price targets ranging from $140,000 to over $200,000 for the remainder of 2025. For those looking to track real-time market data, reliable platforms offer valuable insights.
Frequently Asked Questions
What does a Bitcoin supply shock mean?
A supply shock occurs when demand for Bitcoin significantly exceeds the available supply on exchanges. This often leads to price increases as buyers compete for limited assets, reinforcing bullish market conditions.
Why are exchange reserves important?
Exchange reserves indicate the amount of Bitcoin available for trading. Lower reserves suggest that investors are moving assets into long-term storage, reducing selling pressure and potentially driving prices higher.
How do OTC desks affect Bitcoin’s price?
OTC desks handle large transactions that can influence market sentiment and liquidity. Shrinking OTC reserves signal strong demand from institutional players, which can contribute to upward price momentum.
What role do ETFs play in Bitcoin demand?
Spot Bitcoin ETFs allow institutional and retail investors to gain exposure to Bitcoin without holding it directly. Consistent inflows into these ETFs reflect growing demand and reduce the available supply of BTC on the market.
What happens if Bitcoin falls below $100,000?
A break below $100,000 could trigger substantial liquidations of leveraged long positions, leading to increased volatility. However, strong institutional interest and limited supply may provide support against prolonged declines.
Where can I learn more about market trends?
Staying informed through professional analysis tools can help you understand market dynamics and make better-informed decisions.