Bitcoin exchange balances hit historic lows as supply tightens

Bitcoin (CRYPTO:BTC) balances on exchanges have reached historic lows as a result of a marked reduction in the available supply, according to on-chain data.

A recent report from 10X Research highlighted this trend, showing that Bitcoin's availability for purchase on exchanges has rapidly dwindled.

This contrasts with late summer, when a sudden influx temporarily replenished exchange reserves, but no such boost has occurred this time.

The ongoing depletion of Bitcoin supply is exacerbating the situation, further tightening the market.

Analysts note that Bitcoin, along with the broader cryptocurrency market, is benefiting from favorable catalysts that are expected to drive growth in the upcoming year.

Bitcoin's price, despite some recent fluctuations, has reached near-record levels, nearing the $100,000 mark, and is predicted to continue rising.

According to on-chain data, long-term holders of Bitcoin are contributing to this supply reduction by keeping their positions firmly intact.

This behavior is limiting the flow of Bitcoin into exchanges, which in turn reduces liquidity in the market.

The data, sourced from Glassnode and presented by 10X Research, shows a clear divergence between Bitcoin's available supply on exchanges and its price.

The 30-day moving average of Bitcoin on exchanges has seen a significant drop, while Bitcoin's price surged sharply in the latter half of 2024.

Currently, only three major exchanges—Bitfinex, Binance, and Coinbase—report sufficient Bitcoin reserves to meet demand.

Smaller exchanges are struggling to maintain liquidity, which could lead to increased volatility.

As the tightening supply coincides with rising institutional interest in Bitcoin-related financial products, such as spot ETFs, it is likely to fuel upward price pressure as both retail and institutional demand grows.

At the time of reporting, the Bitcoin (BTC) price was $96,281.63.