Bitcoin balances on crypto exchanges have hit historic lows as on-chain data points to rapidly depleting inventory.
A recent note from 10X Research on Sunday highlighted the trend, emphasizing that the amount of Bitcoin available for purchase has dropped significantly.
The sudden influx of foreign exchange reserves at the end of the summer was in stark contrast to the trends seen when foreign exchange reserves were temporarily replenished, the report said.
This time, however, such an increase in inventory did not occur, exacerbating the supply problem.
Bitcoin and the broader crypto market have been bolstered by favorable conditions that point to continued growth in the year ahead, analysts say.
President-elect Donald Trump has pledged to establish a Bitcoin reserve in the US while protecting crypto mining interests and crafting a favorable industry policy.
That helped Bitcoin's price hit a record high below $100,000 and improved the asset's image as a store of value in the eyes of investors.
On-chain analysis suggests that long-term holders — often seen as a stabilizing force in the market — are holding onto their positions, limiting the flow of Bitcoin to exchanges and reducing liquidity.
The attached chart from 10X Research, using Glassnode data, shows the clear difference between Bitcoin exchange and its price.
Bitcoin supply on exchanges is decreasing. Image: 10X Research
The blue line representing the 30-day moving average of Bitcoin available for purchase has fallen.
Meanwhile, the projected price of Bitcoin on a logarithmic scale has risen sharply in the latter half of 2024.
Currently, three major exchanges – Bitfinex, Binance and Coinbase – report enough Bitcoin reserves to meet the buyer's needs, 10X notes.
Smaller exchanges face increasing challenges in maintaining price volatility.
The consolidation offering coincides with broader macroeconomic trends, including institutional demand for Bitcoin-led financial products such as spot ETFs.
As demand from both retail and institutional players continues to grow, the decline in exchange reserves could further drive price pressures. Decrypt It has already been said.
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