Key Insights:
Bitcoin’s supply on exchanges has dipped below 15% for the first time since 2018, indicating a significant shift in the market. This depletion of supply on exchanges, coupled with growing over-the-counter (OTC) balances, suggests a potential “supply shock,” which could lead to long-term accumulation. For Bitcoin to maintain its upward trajectory, it must stay above the $100,000 threshold.
Bitcoin Supply on Exchanges Hits Seven-Year Low
Recent data from Glassnode reveals that the percentage of Bitcoin (BTC) held on exchanges has plummeted to 14.5%, marking a low not seen since August 2018. This reduction in available Bitcoin on exchanges could signal an impending price increase driven by a “supply shock,” a situation that arises when strong demand from buyers coincides with dwindling BTC availability.
Indicators of Long-Term Holding
This trend often reflects a growing confidence among investors and a tendency to shift towards long-term holding strategies. Typically, Bitcoin is moved to cold storage or self-custody wallets, which reduces the amount available for trading. Additionally, large holders, or “whales,” frequently withdraw Bitcoin after acquiring it, indicating ongoing accumulation. As the supply of coins for sale decreases, the pressure to sell in the short term diminishes.
OTC Bitcoin Balances Decline
Over-the-counter (OTC) trading desks, which facilitate substantial private cryptocurrency transactions, are also witnessing a significant decrease in supply. These desks, which rely on maintaining BTC reserves for efficient trade execution, have seen the total amount of Bitcoin held in recognized OTC addresses drop to historical lows. According to CryptoQuant, there has been a 21% decline in OTC balances connected to miners since January, now resting at an unprecedented 155,472 BTC.
Scarcity and Potential Price Surge
The dwindling supply on both exchanges and OTC desks may heighten the potential for price increases as demand surpasses supply. A recent post by Crypto Chiefs highlighted the unprecedented decline in the available Bitcoin balance OTC, remarking on the stark contrast between balance levels and price, suggesting that a supply issue is unfolding.
Bitcoin’s Strength Amid Institutional Demand
Despite experiencing a 2.85% loss over the past couple of days, Bitcoin has shown resilience above the critical psychological level of $100,000, a threshold it has maintained since May 28. This strength is attributed to robust institutional demand coupled with a shrinking supply, as noted by Lau, the founder of Focusw3b Agency. The growing demand is particularly evident in spot Bitcoin ETF inflows, which have seen 15 consecutive days of positive inflow.
Critical Support for Bitcoin’s Upside
Data from SoSoValue reveals that inflows into spot Bitcoin ETFs exceeded $4.7 billion over the past 15 days, starting from June 9 with inflows surpassing $386 million and continuing with an additional $102 million. Preserving the $100,000 support level will be essential for Bitcoin to secure further gains and avoid substantial downturns. A drop below this level could trigger liquidations of over $6.42 billion worth of leveraged long positions across various exchanges, as indicated by CoinGlass.
Market Predictions
Several analysts are now suggesting that the likelihood of Bitcoin falling below $100,000 is diminishing, with optimistic projections for 2025 ranging from $140,000 to above $200,000.
This article does not provide investment advice or recommendations. All investment and trading activities involve risks, and it is crucial for readers to conduct their own research before making any decisions.
