Bitcoin’s presence on centralized cryptocurrency exchanges has dropped to a critical threshold—less than 15% of the total supply remains available for immediate trading, marking a significant shift in market dynamics. This structural change, not seen since 2018, underscores a growing supply squeeze driven by long-term accumulation, institutional demand, and declining liquidity across trading venues.
With fewer coins available for sale, market conditions are increasingly favoring price appreciation—especially if demand continues to rise. This article explores the implications of shrinking exchange reserves, dwindling over-the-counter (OTC) balances, and sustained institutional inflows into Bitcoin spot ETFs.
Bitcoin Supply on Exchanges Hits Seven-Year Lows
According to on-chain analytics firm Glassnode, the percentage of Bitcoin held on exchanges has fallen to 14.5%, the lowest level since August 2018. This means that over 85% of all Bitcoin is now stored off-exchange—typically in cold storage wallets, private custody solutions, or long-term investment portfolios.
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This trend reflects a broader shift in investor behavior: rather than holding Bitcoin on exchanges for quick trades, users are moving their assets into self-custody, signaling strong confidence in the asset’s long-term value. When supply tightens and demand remains steady—or increases—price pressure tends to build.
A low exchange supply often precedes major bullish movements. Why? Because with fewer coins available for immediate sale, even moderate buying activity can trigger outsized price reactions. This phenomenon is commonly referred to as a supply shock, where scarcity amplifies upward momentum.
OTC Desks Face Historic Liquidity Crunch
The scarcity isn't limited to public exchanges. Over-the-counter (OTC) desks—private trading platforms used by institutions and high-net-worth individuals for large-volume transactions—are also experiencing a dramatic decline in available Bitcoin.
CryptoQuant data reveals that BTC balances in known OTC addresses have dropped by 21% since January 2025, reaching an all-time low of 155,472 BTC. These figures exclude miner wallets and centralized exchange holdings, focusing only on addresses directly tied to OTC liquidity pools.
When OTC desks run low on reserves, they struggle to match large buy orders efficiently. This creates execution risk and can lead to slippage—where buyers end up paying significantly higher prices to complete their trades. As a result, even institutional-scale purchases may begin to exert disproportionate upward pressure on the market.
As one market analyst noted:
“We have never seen such a divergence between balance and price! You are witnessing a supply problem play out.”
This imbalance suggests that the current market structure may not be equipped to handle a sudden spike in institutional demand—especially if more companies or funds decide to allocate capital to Bitcoin in the coming months.
Institutional Demand Fuels the Accumulation Cycle
The primary driver behind this off-exchange migration is institutional adoption, particularly through spot Bitcoin ETFs. Since June 9, U.S.-listed spot Bitcoin ETFs have recorded 15 consecutive days of net inflows, totaling over $4.7 billion in new capital, according to SoSoValue.
These inflows reflect growing confidence among traditional finance players and pension funds looking to diversify into digital assets. Unlike retail traders who may trade frequently, institutional investors typically buy and hold—removing supply from circulation for extended periods.
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This sustained demand is occurring just as supply becomes harder to find. The combination creates a classic bullish setup: strong buyer interest meeting constrained availability.
Why $100,000 Is the Critical Support Level
Despite recent short-term volatility—including a 2.85% dip over two days—Bitcoin has held firm above the $100,000 psychological threshold since May 28. Market observers view this resilience as a sign of strength, especially given the backdrop of shrinking supply and robust institutional inflows.
Lau, founder of Focusw3b Agency, attributes this stability to “strong institutional demand” and a rapidly tightening supply curve.
If Bitcoin manages to maintain this level, analysts project potential price targets between $140,000 and $200,000 by late 2025. However, a break below $100,000 could trigger widespread liquidations.
Data from CoinGlass shows that over $6.42 billion worth of leveraged long positions are clustered just below this level. A sharp drop could cascade into forced selling, leading to increased volatility.
Yet, many experts believe such a scenario is becoming less likely. With so much supply locked away and ETF demand showing no signs of slowing, the path of least resistance appears to be upward.
Frequently Asked Questions
Q: What does it mean when Bitcoin supply on exchanges drops below 15%?
A: It means most Bitcoin is being held off-exchange, typically in long-term storage. This reduces liquid supply and increases scarcity, which can drive price growth when demand rises.
Q: Why are OTC desk balances important?
A: OTC desks handle large trades without impacting the open market. Low balances mean less liquidity for big buyers, potentially leading to higher prices during large purchases.
Q: How do spot Bitcoin ETFs affect supply?
A: ETFs buy and hold Bitcoin on behalf of investors, removing coins from circulation. Sustained inflows reduce available supply and support long-term price appreciation.
Q: Is Bitcoin likely to fall below $100,000?
A: While possible during volatility spikes, many analysts consider it unlikely due to strong institutional support and limited sell-side pressure.
Q: What is a “supply shock” in crypto markets?
A: A supply shock occurs when demand surges while available supply shrinks—often leading to rapid price increases due to imbalance.
Q: Where is Bitcoin likely headed in 2025?
A: Based on current trends, price targets range from $140,000 to over $200,000, assuming continued ETF inflows and no major macroeconomic disruptions.
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Conclusion: Scarcity Meets Institutional Momentum
The current state of Bitcoin’s supply landscape reveals a market undergoing structural transformation. With less than 15% of coins available on exchanges and OTC desks running low on reserves, the ecosystem is increasingly illiquid—setting the stage for volatility and potential upside acceleration.
At the same time, institutional demand through spot ETFs continues to absorb available supply at an unprecedented pace. The result? A perfect storm of declining sell pressure, rising confidence, and growing scarcity.
While short-term corrections are always possible, the underlying fundamentals suggest that Bitcoin is entering a phase defined more by ownership than trading. For investors, this signals not just opportunity—but urgency.
As history has shown, the most significant moves in Bitcoin often follow periods of quiet accumulation. We may now be witnessing the calm before the next major surge.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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