Bitcoin’s supply on cryptocurrency exchanges has plunged to levels not seen since 2018, reaching a new low below 15%, according to analytics firm Glassnode. This depletion, alongside declining Over-the-Counter (OTC) balances, signals a tightening market conditions interpreted as a supply shock, potentially paving the way for a price rally driven by strong institutional demand.

• Bitcoin’s exchange supply dropped below 15% for the first time since August 2018.
• A “supply shock” is indicated as institutional demand grows, particularly from exchange-traded funds (ETFs).
• The price must stay above $100,000 – level held since mid-May – to preserve potential upside.
• BTC is shifting towards long-term accumulation, leaving less available for short-term trading.
• BTC reclaims above $100,000 despite recent losses, buoyed by record inflows into spot ETFs.

Exchange Reserves Deplete to Six-Year Lows

According to Glassnode data cited in the report, the percentage of Bitcoin held on major cryptocurrency exchanges fell to a mere 14.5%, touching a seven-year low.

The reduction in liquid supply available on exchanges is a key driver for experts. Less Bitcoin is available for trading, diminishing the potential for short-term sell-offs and potentially fueling upward price pressure.

Investor confidence is cited as a key factor behind this trend. Long-term holders are increasingly moving Bitcoin out of hot wallets provided by exchanges and into “cold storage” or self-custody wallets, considered safer but less liquid.

Large investors, known as “whales,” were also observed withdrawing Bitcoin after accumulation, further reducing the circulating supply and signaling ongoing long-term investment strategy.

“The Bitcoin balance available OTC is in freefall. We have never seen such a divergence between balance and price! You are witnessing a supply problem play out.” — Crypto Chiefs

OTC Balances Are at Historic Lows

The scarcity of Bitcoin on exchanges extends to the Over-The-Counter (OTC) market, where large trades occur privately between buyers and sellers. Data from CryptoQuant indicates a sharp decline in BTC held within known OTC addresses, which now stands at an all-time low of 155,472 BTC.

According to CryptoQuant data referenced, there has been a 21% decline in OTC address balances linked to miners since January. This signifies persistent outflow from these addresses, which are often used for large-scale mining operations’ transactions.

These OTC reserves are crucial for executing large trades promptly and reliably without significantly impacting the open market price. A depleted pool reduces the immediate availability of Bitcoin for large private transactions.

The combined effect of reduced exchange supplies and low OTC liquidity creates a “supply shock.” Under this concept, strong buyer interest collides with a limited quantity of Bitcoin available for immediate purchase, driving prices upward as demand outstrips availability.

Resilience Despite ETF Inflows and Market Gaps

BTC has remained above the critical $100,000 psychological barrier, despite experiencing a 2.85% loss over the preceding two days according to the latest data.

The resilience is attributed to “strong institutional demand” alongside a “shrinking” supply. Focus, a w3b Agency founder, pointed to continuous inflows into Bitcoin ETFs as a major reinforcing factor.

Spot Bitcoin ETF inflows reached unprecedented levels, with over $4.7 billion moving into these investment vehicles over the past 15 days, according to data from SoSoValue.

Breaking down these inflows: From June 6-10, Bitcoin ETFs recorded cumulative inflows of over $102 million following a streak of 15 consecutive days of positive fund flows starting on June 9.

Breaking the crucial support level of $100,000 would trigger significant consequences. CoinGlass data indicates it could lead to liquidating approximately $6.42 billion worth of cumulative leveraged long positions across all exchanges.

Market analysts who expect further gains see the $100,000 threshold being held as increasingly probable. Without a significant drop below that level, optimistic targets for the remainder of 2025 range from $140,000 up to above $200,000 are being discussed.