CryptoRank.io’s latest analysis reveals a significant trend: Bitcoin supply on centralized exchanges has dropped from 18% to 12% of total supply since early 2020, coinciding with a price surge from $10,000 to over $60,000.
This decline, detailed in a recent X post, suggests reduced selling pressure and growing long-term holder conviction, a pattern backed by a 2023 National Bureau of Economic Research study linking lower exchange reserves to bullish market phases. Several factors are driving this shift. Institutional adoption is accelerating, with companies like MicroStrategy holding 582,000 BTC by mid-2025, tightening liquid supply.
Additionally, the increasing allocation of Bitcoin to Exchange-Traded Funds (ETFs) plays a key role. Fidelity’s 2024 S1 filing highlights that a majority of its ETF-held BTC is stored in cold storage, reducing exchange availability. Cointelegraph’s June 2023 analysis warned of a potential supply shock due to such custodial trends, a forecast gaining traction as ETF custody grows.
Another catalyst is the rise of Bitcoin DeFi (BTCfi). On-chain data from Glassnode shows a 15% increase in BTC locked in DeFi protocols since 2024, with wrapped Bitcoin expanding its utility beyond trading. Platforms like Curve, a liquidity aggregator, are enabling new financial applications, as noted by Chainlink, signaling a maturing ecosystem. This combination of factors—declining exchange reserves, institutional accumulation, and DeFi innovation—points to a robust long-term outlook for Bitcoin.
The shrinking supply on exchanges, coupled with rising demand from both retail and institutional investors, could pave the way for further price appreciation. As the market evolves, these dynamics underscore a shift toward a more stable, conviction-driven Bitcoin economy, making it a focal point for investors in 2025 and beyond.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
