Bitcoin Supply on Exchanges Hits a Bottom

A report released by 10X Research on Sunday highlighted a significant decline in the amount of Bitcoin available for trading. This contrasts sharply with the end of summer when strong inflows into exchanges temporarily boosted supply. Currently, there are no indications that this situation will improve.

Experts suggest that Bitcoin and the broader cryptocurrency market are being bolstered by several positive factors, promising substantial growth in the coming year. Newly elected President Donald Trump has pledged to establish a national Bitcoin reserve fund, safeguard the mining industry, and introduce supportive policies. These commitments have contributed to Bitcoin’s price nearing $100,000—a record high—while reinforcing its status as a store-of-value asset.

On-chain data reveals that long-term investors remain steadfast in holding Bitcoin, limiting exchange sales and thereby reducing liquidity. Charts from 10X Research, using Glassnode data, clearly illustrate the divergence between Bitcoin supply on exchanges and its price. The 30-day moving average of supply has dropped sharply, while Bitcoin’s price has surged during the latter half of 2024.

Bitcoin Supply on Exchanges Hits a Bottom

Currently, only three major exchanges—Bitfinex, Binance, and Coinbase—have sufficient Bitcoin to meet demand. Smaller exchanges are struggling to maintain liquidity, posing risks of price volatility.

This scarcity comes amid heightened interest from financial institutions in Bitcoin-related products like ETFs. With supply continuing to dwindle and demand surging from both retail and institutional investors, Bitcoin’s price could rise even further.