The percentage of Bitcoin reserves on cryptocurrency exchanges has dropped to a record low, indicating potential supply shortages and increasing institutional demand.
Percentage of BTC on Exchanges
According to Glassnode, the percentage of Bitcoin supply on exchanges has decreased to 14.5%, marking a seven-year low. This decrease may signal a 'supply shock' arising when strong buyer demand meets dwindling available BTC. Investors are transferring BTC to cold storage or self-custody wallets, consequently reducing the liquid supply available for trading.
Bitcoin Balances on OTC Markets
Over-the-counter (OTC) markets are also experiencing dwindling BTC reserves. CryptoQuant's data shows that the cumulative balance of BTC held in known OTC addresses is at a historic low of 155,472 BTC. This reflects a decrease in reserves, which may lead to price increases when demand exceeds supply. Crypto Chiefs noted in a recent post that 'the Bitcoin balance available OTC is in freefall.'
Institutional Demand for Bitcoin
Bitcoin has remained strong above the critical $100,000 psychological support since May 28, despite seeing losses of 2.85% recently. Strong institutional demand is becoming evident through record inflows into spot Bitcoin ETFs over the past 15 days. Maintaining the $100,000 psychological support is critical for securing investor confidence.
The decrease in Bitcoin supply on exchanges and OTC markets, along with rising institutional demand, may lead to significant changes in Bitcoin's price dynamics. Maintaining the $100,000 level is expected to help avoid substantial downward volatility.
