Bitcoin (BTC) continues its supply crunch into the new year, as exchange reserves are being moved into whale wallets. The reserves are down to a two-year low as the prices are still close to the range for long-term accumulation.
Despite the Bitcoin (BTC) downward shift, accumulation continues and the trend of low exchange reserves is deepening. Spot markets took the lead in 2025, with the Coinbase premium showing increased US buying. As a result, the exchange reserves are down to 2.35M BTC, as both older whales and newer buyers prefer to take their coins off the markets.
While there are enough sellers to depress the price of Bitcoin, there is also a trend for accumulating tokens under full control. The supply crunch underscores the creation of corporate reserves, as well as holdings by central banks and even state entities that have delayed selling their holdings. Miners are also retaining most of their coins, as the current BTC valuations are above production prices.
Bitcoin holders are moving assets off exchanges
The 2024 bull market, especially in the last months of the year, had the unique feature of lowered exchange reserves during a bull rally. Previously, buyers held BTC on exchanges so they could sell quickly if they needed to.
Currently, the available futures markets tap short-term speculation, while spot traders often withdraw their coins. Whales often move coins to Coinbase or Coinbase Institutional, while smaller transfers prefer Robinhood.
As a result, the Bitcoin network now carries a peak number of both whale and shrimp wallets after years of campaigning for self-custody.
As BTC becomes more valuable, holding a balance on exchanges is seen as the bigger risk due to hacks, exploits, or simply frozen withdrawals or account closures. Self-custodied Bitcoin is also considered less risky compared to stablecoins, which can be frozen or banned from trading.
Tether’s wallet is one of the biggest accumulators, using BTC as a reserve. The wallet has been building up its balance, with even more rapid accumulation in Q4, 2024. Tether now holds the sixth-largest BTC treasury in a single wallet, with 83,759 Bitcoins.
Other top wallets show almost no pressure to sell.
Another portion of BTC is now required for DeFi purposes, including the collaterals for WBTC and CbBTC. Projects like Babylon Labs additionally lock tokens as a source of passive income. Bitcoin DeFi already locks in more than $6.57B in value, while spreading its liquidity to other networks.
The trend for BTC outflows partially affects Ethereum (ETH), though the token is not anywhere close to a supply crunch.
Relentless Bitcoin buyers cause supply shock
While BTC sees some selling, there are always buyers for the physically available coins. As the trend continues, a BTC supply crunch appears imminent.
BTC is still in the hands of dedicated holders, while altcoins and tokens satisfy the demand for short-term speculative trading. The recent withdrawals are a mix of institutional demand, retail buying, and a sense of having the last chance to have BTC in a self-custody wallet.
The ongoing trend, which has accelerated since 2023, suggests a true supply crunch may be close. Currently, strategic whales still have enough supply to sell and pressure the price downward, but expectations for a 2025 bull market may prevent other holders from taking profits at the current price range.
The time horizon for a true supply crunch is within weeks or even months. In early 2025, more than 75% of the BTC supply is considered unavailable for trading. While some of the ETFs sell coins on certain days, their supply is still locked with Coinbase Custody and may not move to other wallets.
The freely available BTC and the potential newly minted coins are quickly becoming scarce. BTC is expected to produce around 657K coins in the period before the 2028 reward halving, which is not expected to be sufficient to satisfy the demand for ETF buyers.
ETFs alone are the single biggest factor decreasing the freely available supply on exchanges. Since January 2024, ETF buying has taken up more than 480K BTC, leading to constant exchange outflows.
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Source: https://www.cryptopolitan.com/bitcoin-down-whales-want-exchange-reserves/