As Bitcoin Supply Dries Up, Market Braces for Turbulence

Bitcoin reserves on centralized exchanges have dropped to their lowest level on record, amplifying expectations of heightened price swings in the near future.

According to data from CryptoQuant, the total amount of Bitcoin held on all centralized platforms fell below 2.5 million BTC as of late May 2025. This continued outflow has coincided with a sharp upward price trend, with Bitcoin recently hitting a new all-time high above $111,500.

Charts from CryptoQuant highlight the divergence between dwindling exchange reserves and rising prices — the descending blue line representing reserves contrasts with the surging white line denoting price. Historically, a declining exchange supply has often preceded price rallies, particularly during periods of rising demand.

Market analysts suggest that Bitcoin may be entering a new phase characterized by sharp movements in both directions due to the tightening supply. Institutional accumulation appears to be playing a central role in shaping this market structure. Wallets holding between 1,000 and 10,000 BTC continue to build their positions steadily, with large amounts of Bitcoin moving into cold storage.

One notable example is investment firm Stratagy, which added 7,390 BTC to its holdings in May alone — bringing its total stash to 576,230 BTC, roughly 2.75% of the total supply, acquired at an average price of $69,726. Other public companies, including GameStop and Japan’s Metaplanet, have also been actively increasing their Bitcoin exposure.

Meanwhile, spot Bitcoin ETFs saw inflows totaling $5.23 billion in the past month, according to data from SoSoValue. Governments are also joining the accumulation trend: both the UAE and Pakistan have stepped up their Bitcoin purchases, while U.S. lawmakers are reportedly debating the creation of a national Bitcoin reserve.

From a technical standpoint, Bitcoin appears to be in a consolidation phase. Momentum indicators show mixed signals — the Relative Strength Index (RSI) stands at 52, suggesting neutral momentum, while the MACD (Moving Average Convergence Divergence) hints at a slight bearish crossover.

Short-term moving averages indicate some downward pressure, but the long-term outlook remains positive. Bitcoin is currently trading above both its 200-day simple and exponential moving averages, which are both trending upward. If the price manages to reclaim its short-term moving average around $106,000, a push toward $110,000 or higher could follow. However, failure to hold that level may see Bitcoin retrace to $98,000 or even $94,000.