Source: cryptoslate
Translated by: Blockchain Knight
According to CryptoQuant data, by the end of April 2025, the BTC supply held by centralized exchanges has dropped to the lowest level since 2019, currently around 2.5 million BTC, a decrease of 500,000 BTC from the end of 2024.
Exchange BTC Supply Shows Trend of Shifting to Self-Custody
The decline in exchange BTC supply is widely interpreted as a signal that investors are moving BTC from platforms to private self-custody wallets. This behavior is typically associated with a long-term holding (HODLing) strategy, as investors withdraw tokens from exchanges to reduce potential selling risks due to platform convenience.
Since early 2023, withdrawing BTC from exchanges has been an ongoing trend, when exchange BTC reserves were around 3.2 million. This trend has accelerated over the past year with the participation of major institutional investors.
Institutional Demand May Trigger Global BTC Supply Shortage
Institutional demand for BTC could be a key factor driving supply shortage. For example, giants like Fidelity have recently significantly increased BTC holdings, with Fidelity alone purchasing BTC worth $253 million, directly exacerbating token outflows from exchanges.
BTC veteran Dennis Porter excitedly stated: "We have never seen this situation before. A global BTC supply shortage has never occurred. This is a major positive signal."
Renowned crypto asset trader Cas Abbe also pointed out on social media: "BTC exchange supply has dropped to the lowest level since the third quarter of 2018. Currently, only 2.5 million BTC remain on exchanges, a decrease of 500,000 BTC from the fourth quarter of 2024. Days ago, Fidelity mentioned that institutions are continuously buying and withdrawing BTC from exchanges. Supply + Demand = Price Explosion."
According to Coinbase's latest survey, over three-quarters of institutional investors plan to increase their digital asset allocation in 2025, with many institutions already using BTC for portfolio diversification and as a hedge against macroeconomic uncertainty.
Additionally, listed companies represented by Strategy are actively accumulating BTC. Since November 2024, these companies have withdrawn over 425,000 BTC from exchanges, with a cumulative holding approaching 350,000.
Impact of Exchange BTC Supply Contraction on the Market
The reduction in exchange BTC supply has several market implications, including reduced selling pressure. With fewer BTC immediately available for sale, the risk of large-scale selling decreases, which helps stabilize or even drive up prices.
If demand continues to grow while supply remains constrained, the market may face a supply shortage, which historically often leads to sharp price increases.
On-chain analyst Willy Woo commented: "BTC fundamentals have turned bullish, and the conditions for breaking historical highs are now mature."
The shift towards self-custody and long-term holding reflects the maturity of the crypto asset market, where retail and institutional investors increasingly view BTC as a strategic asset rather than a speculative tool.
The decline in exchange BTC supply is widely seen as a bullish signal, but also means that surging demand may cause increased price volatility. In the coming weeks, the market will test whether this supply shortage will drive BTC to a new price rally or if market sentiment will change with new macroeconomic data.
