Bitcoin faces a 'supply shock' as BTC reserves on exchanges drop below 15%

Bitcoin reserves (BTC) on exchanges have fallen below 15%, indicating a supply shock as demand from institutions due to ETF funds rises.

The BTC ratio on exchanges has fallen to its lowest level in 7 years

Data from Glassnode shows that the supply ratio of Bitcoin on exchanges has fallen to its lowest level in 7 years at around 14.5% for the first time since August 2018.

The BTC ratio on exchanges | Source: GlassnodeThe supply of Bitcoin on exchanges falling sharply could signal an upcoming price rise due to a "supply shock," which occurs when strong buying demand meets a reduction in the available BTC.

This trend often signals investor confidence and a shift towards long-term holding. For example, BTC is often transferred to cold wallets or self-custody wallets, reducing the available liquidity supply for trading.

Whales often withdraw BTC after buying, signaling that accumulation is taking place. With the amount of BTC available for sale being lower, short-term selling pressure will ease.

OTC Bitcoin balance hits all-time low

OTC exchanges, which facilitate large, private crypto transactions, are also facing a tightening supply situation. These exchanges typically match buyers and sellers but rely on maintaining BTC reserves to execute transactions quickly and reliably.

The total BTC balance held in OTC addresses is at a record low of (ATL). Data from CryptoQuant shows that the balance of OTC addresses linked to miners has fallen by 21% since January, now down to an ATL of 155,472 BTC.

This figure reflects the capital flow coming in from the only two "1-hop" addresses connected to the mining pools, excluding miners and centralized exchange addresses.

BTC balance in OTC addresses | Source: GlassnodeThe scarcity on exchanges and OTC can amplify price rises when demand exceeds supply.

"The available Bitcoin balance on OTC exchanges is plummeting uncontrollably," Crypto Chiefs stated in a recent post on X.

"We have never seen such a large divergence between balance and price! Everyone is witnessing the supply issue unfold."

Bitcoin recovers thanks to strong demand from institutions

Bitcoin has maintained an important psychological support level of $100,000 since May 28, despite witnessing a slight decrease of 2.85% in the past two days.

According to Lau, the founder of Focusw3b Agency, Bitcoin's resilience at the $100,000 mark is supported by "strong demand from institutions" and a "falling" supply.

This demand is most clearly reflected through the cash flow into spot Bitcoin ETF funds, with 15 consecutive days of recorded inflows.

According to a report from SoSoValue, the growth streak began on June 9, with inflows exceeding 386 million USD and continued until Monday, with an additional 102 million USD. In total, more than 4.7 billion USD in capital has been transferred into Bitcoin spot ETF funds in the past 15 days.

Data of cash flow into Bitcoin ETF funds from June 6 to June 10 | Source: SoSoValueMaintaining the psychological support level of $100,000 will be very important to ensure the growth momentum of Bitcoin and avoid sharp declines.

Data from CoinGlass shows that the potential adjustment below $100,000 will trigger liquidation of more than $6.42 billion in value of accumulated leveraged Long positions across all exchanges.

Bitcoin Liquidation Chart | Source: CoinGlassMany analysts suggest that Bitcoin is unlikely to fall below $100,000, while setting optimistic targets for the remainder of 2025 ranging from $140,000 to over $200,000.

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