Bitcoin Exchange Reserves Fall To Lowest Levels on Record: The Bullish Signal Most Traders Are Missing

Bitcoin is holding above $90,000 as the market heads into a highly anticipated FOMC meeting, a moment that could define the next direction for risk assets. But while price action keeps traders on edge, on-chain indicators are painting a surprisingly different picture beneath the surface. According to a new CryptoQuant report by XWIN Research Japan, Bitcoin’s exchange reserves have continued to fall sharply throughout 2025, even as price corrected toward the $90K range.

The data shows that the total amount of BTC held on centralized exchanges has dropped to 2.76 million BTC, reaching one of the lowest levels ever recorded. What makes this trend even more striking is its timing: during the steep November–December sell-off, exchange balances did not rise—they fell faster. The report highlights this behavior in the red-marked zone of the chart, showing accelerating outflows while the price was dropping.

This pattern signals something unusual: investors are not sending coins to exchanges to sell into weakness. Instead, they continue withdrawing BTC into long-term custody, suggesting confidence rather than capitulation. As volatility builds ahead of the FOMC decision, the contrast between short-term price fear and long-term accumulation is becoming one of the most important dynamics in the current Bitcoin market.

Shrinking Exchange Reserves Signal Structural Strength

The report emphasizes that Bitcoin’s rapidly shrinking exchange reserves carry important structural implications for the market. When fewer coins sit on centralized exchanges, it means less Bitcoin is available for immediate sale, effectively tightening the liquid supply. According to the data, this decline is not being driven by short-term speculators but by long-term holders and institutional entities steadily moving BTC into self-custody or cold storage.

What makes this trend remarkable is its timing. Historically, sharp price declines trigger a wave of inflows to exchanges as investors prepare to sell or panic-exit their positions. This cycle, however, tells a very different story. Even as Bitcoin corrected into the $90K region, exchange balances kept falling, suggesting that buyers with a long-term outlook are actively accumulating rather than retreating.

This divergence between price action and on-chain behavior signals underlying strength. While short-term volatility may continue—especially around macro catalysts like the FOMC meeting—the broader structure points toward a market quietly tightening its available supply. As reserves move toward historic lows, a future “supply shock” becomes increasingly plausible.

Despite the weak spot market performance, on-chain metrics are slowly turning bullish, hinting that the foundation for the next major trend may already be forming beneath the surface.

BTC Tests Critical Support as Market Awaits Direction

Bitcoin’s price action on the 3-day chart shows a market attempting to stabilize after a sharp corrective phase. BTC is currently trading around $90,437, hovering just above the 200-day moving average — a level that has historically acted as a major dynamic support during mid-cycle retracements. The recent bounce from the $87K–$88K region suggests that buyers are defending this zone, but the structure remains fragile as long as the price stays below the 50-day and 100-day moving averages, both of which are now sloping downward.

The chart reveals a clear shift in momentum. After months of steady higher lows, Bitcoin broke its ascending structure in late November, leading to a fast drop toward the high-$80K range. Volume increased during the decline, indicating stronger participation on the sell side. However, the subsequent candles show shrinking sell volume, hinting at exhaustion among short-term sellers.

For a meaningful recovery, BTC must reclaim the $95K–$97K area, where previous support turned into resistance. Failure to break that zone would likely keep the market in a consolidation phase, with risks of another retest of the 200-day MA.

Featured image from ChatGPT, chart from TradingView.com