The supply of Bitcoin held on centralized exchanges has reached its lowest point since 2019 according to data from CryptoQuant. As of late April 2025, only about 2.5 million BTC remain on exchanges, representing a drop of 500,000 coins since the end of 2024.

Bitcoin supply on exchanges shows shift toward self-custody

The decline in Bitcoin supply on exchange balances is widely interpreted as a sign that more investors are moving their BTC into private self-custodial wallets. This behavior is typically associated with long-term holding, or “HODLing,” as investors withdraw coins from platforms where they could be easily sold.

Removing Bitcoin from exchanges is a trend that has been building since early 2023, when reserves stood at around 3.2 million BTC. The trend has accelerated over the past year with the involvement of major institutional players.

Institutional demand could drive global supply crunch

Institutional demand could drive a Bitcoin supply crunch as major firms like Fidelity have made substantial Bitcoin purchases. Fidelity alone recently acquired $253 million worth of BTC, contributing to the outflow of coins from exchanges. Bitcoin veteran Dennis Porter enthused:

“We have never seen this before. We have never had a global Bitcoin supply crunch. Bullish.”

Renowned crypto trader Cas Abbe posted:

“Bitcoin exchange supply is now down to its lowest level since Q3 2018. As of today 2.5M $BTC are on exchanges, down 500K from Q4 2024. A few days ago, Fidelity mentioned that institutions are buying and withdrawing BTC from exchanges consistently.

Supply + Demand = Price Explosion

According to a recent Coinbase survey, more than three-quarters of institutional investors plan to increase their digital asset allocations in 2025. Many are already utilizing or exploring Bitcoin for portfolio diversification and as a hedge against macroeconomic uncertainty.

Publicly traded companies, led by Strategy, have also been aggressively accumulating Bitcoin, with over 425,000 BTC withdrawn from exchanges since November 2024 and nearly 350,000 BTC acquired by listed firms.

How Bitcoin’s shrinking supply on exchanges affects the market

The shrinking supply of Bitcoin on exchanges has several implications for the market, including reduced selling pressure. With fewer coins available for immediate sale, the risk of large-scale sell-offs diminishes, helping to stabilize or even drive up prices.

If demand continues to rise while supply remains constrained, the market could also experience a supply shock, which has historically been a precursor to sharp price increases.

On-chain analyst Willy Woo posted:

“BTC fundamentals have turned bullish, not a bad setup to break all time highs.”

The move toward self-custody and long-term holding reflects a maturing crypto market, where both retail and institutional investors increasingly view Bitcoin as a strategic asset rather than a speculative play.

The reduced Bitcoin supply on exchanges is widely regarded as a bullish indicator. However, it also means that any sudden surge in demand could lead to increased price volatility. The coming weeks will tell whether this supply crunch translates into the next leg of Bitcoin’s rally—or if market sentiment shifts as new macroeconomic data emerges.

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