Bitcoin stocks are at 7-year lows as hedge funds buy the dip.
Crypto investors are experiencing a supply shock as Bitcoin stocks fall to near seven-year lows amid institutional buying.
Bitcoin (BTC) stock across all cryptocurrency exchanges fell to 2.35 million BTC on January 13, which is the closest seven-year low seen since June 2018, when Bitcoin traded just above $7,000, CryptoQuant data shows.
Bitcoin exchange stock. Source: CryptoQuant
According to Bitwise's head of research, Andre Dragoš, the fall in bitcoin supply on the exchange could be due to continued discount buying by institutional participants.
Crypto hedge funds are buying the current dip in bitcoin, the researcher wrote in a January 13 X post.
“1 million global hedge funds' beta for BTC has increased with recent cyclical downturns, increasing market exposure to Bitcoin and other crypto assets.”
Global crypto hedge fund beta Source: Andre Dragoš
A decrease in the supply of Bitcoin on exchanges could indicate an incoming price rally led by a “supply shock,” which occurs when strong buyer demand meets declining BTC volumes, leading to further price appreciation.
In December, U.S. spot bitcoin exchange-traded funds (ETFs) bought nearly 14,000 coins as bitcoin hit a new all-time high of $108,300 on Dec. 17.
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Bitcoin's recovery to $100,000 lacks trading activity
While Bitcoin's 2025 journey remains promising, analysts continue to cite major resistance above the $100,000 psychological mark before further potential upside.
While a recovery above $100,000 could be imminent, the crypto market lacks the trading activity to make a significant rally, said Ryan Lee, chief analyst at Bitget Research.
“Market sentiment appears to be stable, indicating potential consolidation or upside if resistance is overcome,” the analyst told Cointelegraph.
“However, technical analysis shows a low volume of trading in the daily time frame, which indicates that there is no significant motivation to break the current resistance or support levels,” he said.
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Beyond Bitcoin, the broader crypto market is suffering from a lack of trading activity.
According to a Jan. 13 X post by market intelligence platform Sentiment, trading volume around some major cryptocurrencies has fallen to a more than two-month low since the US election.
“Crypto trading volume has collapsed as currency paralysis has flooded the market. Top projects in Layer 1s, Layer 2's, meme coins and AI saw this low trading level on November 4th. A lack of excitement is a sign of FUD, which increases the likelihood of relapse.
Crypto trading volume drops to pre-Trump levels. Source: Santiment
Still, analysts are optimistic about Bitcoin's trajectory, driven by a predicted $20 trillion increase in the global money supply, with analysts expecting a cycle above $150,000 by the end of 2025.
Bitcoin at the US Reserve: Can prices reach $500k? Source: YouTube
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