Bitcoin’s supply on exchanges has fallen to just 7.1% — its lowest level since November 2018 — while Ethereum has dropped below 4.9% for the first time in its 10+ year history.
The pace of outflows over the past five years is striking: more than 1.7 million BTC and 15.3 million ETH have been withdrawn from CEXes.
These figures indicate a growing trend toward self-custody and long-term holding, potentially setting the stage for a supply squeeze if demand begins to accelerate.
The supply shock debate
A supply shock typically occurs when available tokens on exchanges dwindle just as demand surges, creating upward pressure on prices. With BTC and ETH balances at multi-year lows, the stage seems set.
Historically, similar trends have preceded major rallies, as shrinking float limits sell-side liquidity. But not everyone’s convinced.
Some argue whales may simply be moving funds to cold storage for security, not accumulation. Others point to a still-cautious retail crowd and a possible cooling buzz post-ETFs.
If sentiment shifts, sidelined capital could re-enter exchanges, quickly reversing the trend.
Bitcoin: From fringe to mainstream
Roughly 50 million Americans now own Bitcoin — surpassing gold ownership by a wide margin, per River and The Nakamoto Project. As BTC vanishes from exchanges, this shift is huge as far as priorities go.
Bitcoin is no longer a fringe asset but a growing reserve alternative. The sharp drop in exchange supply may be tied less to speculation and more to a long-term redefinition of value in the digital age.
