Why is the price of Bitcoin falling despite the low exchange rate?

Investors view currency reserves as a key indicator of savings and asset scarcity. Bitcoin, held on exchanges, has hit an all-time low this month.

However, as Bitcoin enters the final days of 2025, its price risks closing the year below its opening level. Why does a falling currency reserve fail to support higher prices?

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How the currency slump is bouncing back on Bitcoin's value.

Under normal conditions, a sharp decline in currency reserves indicates that long-term investors will move BTC to cold wallets. This feature reduces sales pressure and often increases the price.

CryptoQuant data shows that exchange reserves (blue line) have been steadily decreasing since the beginning of the year. The measure reached a new low near the end of 2025. Holders have accelerated BTC withdrawals since September. Approximately 2.751 million BTC is currently held on the exchange.

At the same time, the price of Bitcoin dropped from more than $126,000 to $86,500. Several recent analyzes show a different side of the story. A decrease in the number of BTC on exchanges can sometimes have a negative effect.

First, the Inter-Exchange Flow Pulse (IFP) is weakened. IFP measures the movement of Bitcoin between exchanges by reflecting overall trading activity.

“When IFP is high, arbitrage and money supply work more efficiently. Order books stay fat, and price movements become more stable. When IFP falls, market ‘blood flow' weakens. Prices become more vulnerable to relatively small trades,” explained analyst XWIN Research Japan.

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XWIN Research Japan added that this decline in liquidity coincides with historically low currency reserves. Scarcity does not support prices as intended. Instead, thin order books make the market weak. Even moderate selling pressure can trigger price reversals.

Second, most exchanges have recently shown BTC accumulation, reflected as a negative BTC flow. In contrast, Binance—the exchange with the largest share of liquidity—recorded high bitcoin inflows.

“This is important because Binance is the largest Bitcoin liquidity center. The behavior of users and whales there often affects the short-term price action. When Bitcoin flows into Binance, even as other exchanges flow out, the overall market strength may remain muted,” explained analyst Crazzyblockk.

In other words, Binance acts as the main liquidity hub of the market. Capital accumulation on this exchange weakens broader market momentum. It also replaces symbols accumulated from various platforms.

The currency stock fell to record lows. However, poor liquidity and capital accumulation at Binance continue to stifle Bitcoin's upside.

Additionally, a recent BeCrypto analysis found that Bitcoin fell as traders took risks ahead of the Bank of Japan's rate hike. Such a move could threaten global currency exchange and yen trading.

Market dynamics by the end of 2025 highlights a key lesson. The information on the chain does not always give a single direct interpretation.