Bitcoin supply on crypto exchanges hits 5-year low and that’s a good sign
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Bitcoin supply on crypto exchanges hits 5-year low and that’s a good sign

Apr 11, 2025
Bitcoin supply on crypto exchanges hits 5-year low and that’s a good signBitcoin supply on crypto exchanges hits 5-year low and that’s a good signVideo Thumbnail

The number of Bitcoins held on centralized exchanges has dropped to its lowest level in over five years. This trend reflects a clear shift in investor behavior as more holders choose to move their BTC into personal wallets and cold storage solutions. 

On-chain data shows that investors are increasingly favoring long-term custody strategies, often interpreted as a sign of growing confidence in Bitcoin’s future, especially among more sophisticated market participants like institutions.

Growing institutional interest

Retail investors tend to leave their assets on exchanges for easier access and trading, but the recent decline in exchange balances suggests that a larger portion of the market is now playing the long game. This aligns with growing institutional interest, where secure custody is the standard, and capital is often allocated with multi-year horizons in mind.

Tariffs could be beneficial for Bitcoin

This development comes at a time of renewed market volatility. President Donald Trump reignited trade war concerns by imposing tariffs on key international partners. The announcement briefly sent traditional markets into a tailspin, highlighting how fragile investor sentiment remains. Although Trump later introduced a 90-day pause on the tariffs, which temporarily eased pressure on equity markets, the broader sense of instability has only strengthened Bitcoin’s appeal as a hedge against macroeconomic risk.

Supply crunch sets Bitcoin up for a breakout

As the BTC supply on exchanges continues to decline, market liquidity becomes more constrained. If demand rises due to political tensions, inflation concerns, or capital flight, fewer coins will be available to meet it. This kind of supply crunch has historically triggered sharp upward movements in Bitcoin’s price. In short, declining exchange reserves are more than just a bullish signal, as they set the stage for potentially explosive price action during periods of rising demand.

This report has been prepared and issued by 21Shares AG for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Crypto asset trading involves a high degree of risk. The crypto asset market is new to many and unproven and may have the potential to not grow as expected.

Currently, there is relatively small use of crypto assets in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in crypto assets. In order to participate in the trading of crypto assets, you should be capable of evaluating the merits and risks of the investment and be able to bear the economic risk of losing your entire investment.

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