The Bitcoin supply on exchanges has indeed dropped to its lowest level since 2018, reaching approximately 7.53% of the total circulating supply as of March 2025. This is a significant decrease from previous years, with estimates suggesting around 2.6 million BTC are currently held on exchanges, compared to higher levels during the 2021 bull market.
This trend reflects a shift in investor behavior, with more individuals and institutions moving Bitcoin to self-custody or cold storage, signaling strong long-term holding sentiment and confidence in Bitcoin’s value as a store of value amid global economic uncertainties.
Lower exchange supply means fewer Bitcoins are available for immediate sale, potentially reducing short-term selling pressure and supporting price stability or upward momentum. Public companies, notably Strategy (co-founded by Michael Saylor), have acquired over 425,000 BTC since November 2024, with Strategy alone holding 285,980 BTC. This corporate accumulation is a major driver of the supply reduction.
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The decline in exchange reserves has coincided with increased network activity (e.g., 1.16% rise in active addresses to 10.17 million) and technical indicators suggesting a bullish phase, though short-term volatility remains possible due to reduced liquidity. Bitcoin’s price was reported at around $87,653–$97,000 in March–April 2025, with support levels near $81,325.
Similar drops in exchange supply have historically preceded bullish market phases, as seen in 2018 and 2020, though low on-chain activity and transaction fees raise concerns about Bitcoin’s long-term security budget. This trend could lead to a supply squeeze if demand rises, potentially driving prices higher, though volatility persists due to macroeconomic factors and market sentiment.
When Bitcoin supply on exchanges drops (like the current low of ~7.53% of circulating supply, or ~2.6 million BTC as of March 2025), fewer coins are readily available for trading or selling. Many investors move Bitcoin to self-custody (e.g., hardware wallets) or long-term storage, reducing the liquid supply on exchanges. Institutional and corporate buying (e.g., Strategy’s 285,980 BTC holdings) further locks up supply.
Demand for Bitcoin can rise due to factors like institutional adoption, macroeconomic uncertainty (e.g., inflation fears), or bullish market sentiment. New buyers, including retail investors, funds, or corporations, enter the market seeking to acquire Bitcoin. With fewer Bitcoins available on exchanges, even moderate increases in demand can lead to significant price increases because buyers compete for a limited pool of coins.
Sellers may hold off, expecting higher prices, further tightening supply and amplifying the squeeze. A supply squeeze can trigger rapid price surges, as seen in past Bitcoin bull runs (e.g., 2017, 2020–2021). It can also increase volatility, as low liquidity on exchanges means smaller trades can cause outsized price movements. The Bitcoin supply on exchanges is at its lowest since 2018, reducing the pool of coins available for immediate sale.
Companies like Strategy and Metaplanet are aggressively buying and holding Bitcoin, removing it from circulation. Rising active addresses (10.17 million, up 1.16%) and bullish technical indicators (e.g., price support at ~$81,325, trading at ~$87,653–$93,000) suggest growing interest. Increased institutional adoption, ETF inflows, or macroeconomic events (e.g., fiat currency devaluation) could spike demand, intensifying the squeeze.
A supply squeeze can lead to sharp price corrections if speculative demand wanes or profit-taking occurs. Low exchange reserves can exacerbate price swings due to reduced market depth. Regulatory changes, macroeconomic shifts, or network issues (e.g., low transaction fees impacting Bitcoin’s security budget) could disrupt the squeeze.
A Bitcoin supply squeeze happens when low exchange reserves meet rising demand, creating a scarcity-driven price surge. The current drop in exchange supply to 2018 lows sets the stage for a potential squeeze, especially if demand accelerates, though volatility and external risks remain.