Bitcoin Supply Ratio On Exchanges Plummets Sharply To New Lows, A Bullish Sign For BTC?

After a challenging period for Bitcoin, the flagship asset has gained brief upward traction, reclaiming and surging past key resistance levels as the broader market slowly turns bullish. With BTC’s bullish momentum building, investors are holding firm to their coins, sending more BTC to cold storage.

A Decline In BTC Exchange Reserve

Investor sentiment has witnessed a notable change following Bitcoin’s renewed upward performance. Santiment, an on-chain data and intelligence platform, reported that BTC’s supply on crypto exchanges has dropped significantly, signaling reduced selling pressure.

The development indicates growing confidence among market players, which typically aligns with accumulation phases. When BTC’s exchange supply declines, it implies that investors are moving their coins to self-custody wallets, potentially reducing short-term sell-offs.

According to the platform, the supply ratio of Bitcoin on crypto exchanges has fallen to 7.53%, marking its lowest level since February 20, 2018. The 7-year milestone shows that investors are still at ease holding BTC for the long haul despite short-term price volatility and swings.

Santiment highlighted that the shift is an indicator that holders are not eager to sell or dump immediately during waning price performances. With supply decreasing on exchanges, the available supply for spot selling has also declined, which might serve as a hedge against abrupt price declines in the near future.

As seen in the past, a drop in exchange balances has been associated with bullish conditions, reducing the likelihood of profit-taking. Thus, should this trend continue, it might set the stage for a potential price surge in the short term.

Furthermore, the platform has linked the sharp decline to the growing interest from institutions and long-term custodial solutions. As more Bitcoin moves into secure institutional storage or self-custody, it is clear that market players are considering the flagship crypto less as a speculative trading asset and more as a store of value.

In the meantime, this change in behavior encourages market maturity and stability, allowing BTC to gain upside momentum. However, recent performances show that this supply squeeze has not yet influenced BTC’s price trajectory.

BTC Big Players Are Accumulating

A notable shift has also been spotted among Bitcoin major players or whales, as reported by on-chain expert and macro researcher Axel Adler Jr. in a recent post on X. The supply from these investors, which has been dropping for some time, has started to move up again.

Over the last 5 months, the supply from major players has decreased by a total of 290,000 BTC. However, recent data shows that average numbers are increasing, indicating that participants with wallet balances bigger than 1,000 BTC are accumulating supply. This rise implies that whales are no longer selling their coins.