Exchange Reserves Continue to Decline
Bitcoin balances on exchanges dropped again this week, according to data from Glassnode. The decrease was about 0.23 percent, which translates to roughly 400 BTC over seven days. Total exchange balances now stand at 171,900 BTC, down from 172,300 BTC the previous week. This continues a long-term trend that’s been building for years.
I think what’s interesting here is the context. These current exchange balances represent just 0.87 percent of Bitcoin’s total supply of 19.8 million BTC. That’s only about $18.7 billion worth of Bitcoin sitting on exchanges right now, compared to the overall market cap of $2.16 trillion. The difference is pretty striking when you think about it.
Monday’s Price Movement and Supply Dynamics
Monday saw Bitcoin’s price jump to around $115,000 during a brief rally. Interestingly, this price movement coincided with a withdrawal of less than 500 BTC from exchanges. It wasn’t a massive buying wave that drove the price up—rather, it seems to have been more about supply constraints.
When there are fewer coins available on exchanges, even modest buying activity can have an outsized impact on price. The 500 BTC withdrawal represented just 0.29 percent of exchange reserves, but it still affected market sentiment. This pattern suggests that price movements are becoming more sensitive to small changes in available supply.
Bitcoin has since pulled back from those highs and is currently trading between $109,000 and $110,000. That’s about 5 percent below last week’s peak. Analysts are watching support around $108,000 and resistance near $117,000. The market appears to be in a consolidation phase after the September highs.
Long-Term Trends and Market Implications
The broader picture shows exchange balances have been declining since 2021, when they were over 2.3 million BTC. That’s a significant reduction over time. It indicates that investors are continuing to move their Bitcoin off exchanges, likely for long-term holding.
This trend isn’t isolated to one region either. Major exchanges in both the U.S. and Asia are seeing lower sell-side supply. It seems like holders across different markets are behaving similarly—they’re not looking to sell.
With reserves now at 171,900 BTC, we’re approaching the lowest levels in about four years. This creates conditions where markets could become more volatile. When there’s less supply available, even normal trading activity can cause larger price swings.
Perhaps the key takeaway is that the recent price rally wasn’t driven by massive new demand, but rather by shrinking exchange balances. It’s a supply story more than a demand story. As available coins become scarcer, the market mechanics change in ways that could lead to increased volatility, especially if selling pressure returns.
