Today, the Bitcoin reserves of the exchanges have reached a new record low in recent years.
It means that many people who had BTC on exchanges have likely withdrawn them to move them to self-custodial wallets, or to other platforms that are not exchanges.
The all-time low of Bitcoin reserves on exchanges
What was recorded today is not a historical record, but it is the lowest point reached in recent years.
Consider that, according to the data from CryptoQuant, in November 2022 after the closure of FTX, which led many people to withdraw their funds from exchanges to avoid further risks, there were still more than three million BTC in reserve on the exchanges.
Now instead we have dropped to 2.4 million, which is 20% less.
At the end of 2021, however, there were more than 3.3 million.
In particular, the bulk of the recent decline started right in November 2024, when the price of Bitcoin began to rise thanks to the so-called Trump-trade, then going on to exceed for the first time in its history the $100,000.
In fact, from November 2022 to July 2024 the BTC on crypto exchanges had even increased from 3 to 3.1 million, although by October they had returned to being 3 million.
The decline, therefore, is primarily a recent phenomenon, paradoxically linked to the increase in price.
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The causes
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The decline of November 2022 was due to the panic triggered by the closure of FTX, but the recent one is definitely due to other causes.
In theory, when the price of Bitcoin increases, there are those who decide to take profit by selling it, and this leads to an increase in BTC deposits on crypto exchanges with the specific goal of selling them.
This time, paradoxically, the opposite happened, meaning there were more people who bought and withdrew BTC from the exchanges than those who deposited them to sell.
This dynamic could also be partially explained by bringing up the ETF crypto.
In fact, crypto ETFs do not hold BTC on exchanges, and although they buy them OTC, it is not uncommon for OTC desks to sometimes be forced to get them from exchanges, directly or indirectly, if they cannot find them elsewhere.
In fact, the periods of greatest growth of BTC held by ETFs have been three.
The first, obviously, was the initial one, from January 2024, when they landed on the stock market, in March of the same year. However, at that time the number of BTC on the exchanges was reduced only from 3.175 million to 3.107 million, which is really very little.
The second, however, was precisely between early November and mid-December, when the BTC on exchanges decreased from 3.004 million to 2.784. It should be noted, however, that already from April to October, while the crypto ETFs were accumulating few BTC, those on exchanges were decreasing from 3.107 million to 3.004.
Furthermore, the third period was the one between the end of April and today, so much so that it seems to be still ongoing, and in fact, this coincides with the latest strong reduction of BTC on exchanges, which went from 2.676 million to the current 2.400.
Therefore, the main cause seems to be the withdrawal from the market of BTC purchased by crypto ETFs.
The effect on the price
Note that the price of Bitcoin is determined on crypto exchanges, where you can buy and sell BTC directly in dollars or stablecoins.
Therefore, the BTC that ETFs hold as a reserve do not contribute to the variations in the price of Bitcoin, except indirectly and slowly. It is instead the BTC present on crypto exchanges that have an impact on the price.
In particular, when the BTC present on crypto exchanges decrease, it is plausible to imagine that this also produces a reduction in selling pressure.
To tell the truth, in recent months the buying pressure has also decreased significantly, and this is why despite the strong reduction of BTC on crypto exchanges, the price of Bitcoin has not yet managed to rise even above the January records.
Therefore, while on one hand the reduction of BTC on exchanges reduces the selling pressure, this reduction does not necessarily lead to an increase in price, because the latter also necessarily depends on changes in buying pressure.
However, in a record situation like the current one, with the selling pressure of Bitcoin on crypto exchanges seemingly at its lowest at least since the end of 2021, a small but significant increase in buying pressure would be enough to inevitably increase its price.
Note that the buying pressure is currently so low that it might actually rise sooner or later, and if at that point the selling pressure remains low, it is more than reasonable to expect a price increase. However, it should be noted that at the moment there is no sign of a possible imminent increase in buying pressure, given that the general interest in Bitcoin is currently very low.