Source: cryptoslate
Compiled by: Blockchain Knight
According to data from CryptoQuant, as of the end of April 2025, the BTC supply held by centralized exchanges has fallen to its lowest level since 2019, with only about 2.5 million BTC left, a decrease of 500,000 from the end of 2024.
Exchange BTC supply shows trend toward self-custody
The decline in the supply of BTC on exchanges is widely interpreted as a sign that investors are moving BTC from platforms to private self-custodial wallets. This behavior is often associated with a long-term holding (HODLing) strategy, as investors withdraw tokens from exchanges to reduce the risk of potential sell-offs due to the convenience of platform operations.
The removal of BTC from exchanges has been an ongoing trend since early 2023, when exchanges held approximately 3.2 million BTC in reserves. This trend has accelerated over the past year as major institutional investors have participated.
Institutional demand may cause global BTC supply shortage
Institutional demand for BTC may become a key factor driving supply shortages. For example, giant companies such as Fidelity have recently increased their holdings of BTC significantly, with Fidelity alone purchasing $253 million worth of BTC, which directly exacerbated the outflow of exchange tokens.
BTC veteran Dennis Porter excitedly said: "We have never seen this before. A global BTC supply shortage has never happened. This is a major positive signal."
Cas Abbe, a well-known Crypto asset trader, also pointed out on social media: "The supply of BTC exchanges has dropped to the lowest level since the third quarter of 2018. As of now, there are only 2.5 million BTC left on the exchange, which is 500,000 less than in the fourth quarter of 2024. A few days ago, Fidelity mentioned that institutions are continuing to buy and withdraw BTC from exchanges. Supply + demand = price explosion."
According to the latest survey by Coinbase, more than three-quarters of institutional investors plan to increase their digital asset allocation by 2025, many of which have used BTC to diversify their portfolios and as a hedge against macroeconomic uncertainty.
In addition, listed companies represented by Strategy are also actively hoarding BTC. Since November 2024, these companies have withdrawn more than 425,000 BTC from exchanges, with a cumulative holding of nearly 350,000 BTC.
The impact of shrinking BTC supply on exchanges on the market
The reduction in the supply of BTC on exchanges has several impacts on the market, including a reduction in selling pressure. With fewer BTC available for immediate sale, the risk of a large sell-off is reduced, which can help stabilize or even push prices higher.
If demand continues to grow and supply remains constrained, the market could face shortages, which historically have led to sharp price increases.
On-chain analyst Willy Woo commented: "BTC fundamentals have turned bullish, and the conditions for breaking through all-time highs are ripe."
The shift toward self-custody and long-term holding reflects the maturation of the crypto asset market, where both retail and institutional investors increasingly view BTC as a strategic asset rather than a speculative tool.
The decline in the supply of BTC on exchanges is generally seen as a bullish sign, but it also means that a surge in demand could trigger increased price volatility. In the coming weeks, the market will verify whether this supply shortage will drive BTC prices to start a new round of gains, or whether market sentiment will change with the emergence of new macroeconomic data.
