Bitcoin has temporarily rebounded from the slump towards $76,000 earlier in April, although the outlook for President Trump's tariff war remains uncertain, but the market has seen a significant turnaround. The supply of Bitcoin on exchanges has dropped to its lowest level since 2018, laying the groundwork for potential supply shocks and increased price volatility, with Bitcoin's fundamentals having shifted to 'bullish.'
According to CryptoQuant data, the amount of Bitcoin held by centralized exchanges has dropped to its lowest point since 2019. As of late April 2025, only about 2.5 million Bitcoins remain on exchanges, which means a reduction of 500,000 since the end of 2024.
The decline in Bitcoin supply on exchanges is widely interpreted as a sign that more investors are moving their Bitcoins to private custody wallets. This behavior is often associated with long-term holding (HODL), as investors take Bitcoin off easily sellable platforms.
The trend of delisting Bitcoin from exchanges has been forming since early 2023, when Bitcoin reserves were about 3.2 million Bitcoins. Over the past year, this trend has accelerated further with the participation of major institutional players.
Due to large institutions like Fidelity purchasing significant amounts of Bitcoin, institutional demand may lead to a tightening of Bitcoin supply. Fidelity alone recently purchased $253 million worth of Bitcoin, resulting in Bitcoin flowing out of exchanges.
Bitcoin veteran Dennis Porter stated: 'We have never seen anything like this. We have never experienced a global Bitcoin supply tightening, and it's bullish.'
Famous cryptocurrency trader Cas Abbe stated: 'The supply of Bitcoin on exchanges has now fallen to its lowest level since the third quarter of 2018. As of today, there are 2.5 million Bitcoins on exchanges, a decrease of 500,000 since the fourth quarter of 2024. A few days ago, Fidelity mentioned that institutions are continuously buying and withdrawing Bitcoin from exchanges.'
'Supply Demand = Price Explosion.'
According to a recent survey by Coinbase, over 3/4 of institutional investors plan to increase their digital asset allocation in 2025. Many institutions are already leveraging or exploring Bitcoin for portfolio diversification and hedging against macroeconomic uncertainty.
Public companies led by Strategy (formerly MicroStrategy) are also actively accumulating Bitcoin. Since November 2024, over 425,000 Bitcoins have been withdrawn from exchanges, with public companies acquiring nearly 350,000 Bitcoins.
The reduction in Bitcoin supply on exchanges has many effects on the market, including a decrease in selling pressure. As the amount of Bitcoin available for immediate sale decreases, the risk of large-scale sell-offs diminishes, helping to stabilize or even push prices higher.
If demand continues to rise while supply remains constrained, the market may also face supply shocks, which historically often precede significant price increases.
On-chain analyst Willy Woo stated: 'Bitcoin's fundamentals have turned bullish, which is not a bad sign for breaking historical highs.'
The move towards self-custody and long-term holding reflects the maturation of the cryptocurrency market, with retail and institutional investors increasingly viewing Bitcoin as a strategic asset rather than a speculative one.
The reduction in Bitcoin supply on exchanges is widely seen as a bullish indicator. However, it also means that any sudden surge in demand could lead to increased price volatility.
In the coming weeks, the market will be watching to see if this supply tightening will translate into the next round of Bitcoin price increases, or if market sentiment will shift with the emergence of new macroeconomic data.
