Bitcoin reserves on cryptocurrency exchanges have dropped to their lowest level since 2022, with only 2.5 million BTC remaining. This decline is seen as a sign of a potential supply crunch, as institutional demand continues to grow, particularly from exchange-traded funds (ETFs). Data from CryptoQuant confirms that exchange reserves have not been this low since tracking began. Despite market volatility, Bitcoin is holding above $95,000, showing resilience amid economic uncertainties.
Investor sentiment has been mixed, with Bitcoin ETFs recording their first weekly outflows of 2025. On Feb. 10, U.S. spot Bitcoin ETFs saw net negative outflows of $186 million, reversing the $171 million inflows from the previous day. Analysts believe this shift reflects changing market dynamics rather than a lasting trend. Even with ETF outflows, the overall trajectory remains positive due to institutional accumulation and reduced selling from long-term holders.
Analysts point to “seller exhaustion” as a sign that selling pressure is easing and buying demand is picking up. Ryan Lee, chief analyst at Bitget Research, highlights the role of psychological support levels and macroeconomic conditions in Bitcoin’s stability. While ETF inflows have slowed, projections for Bitcoin’s price in 2025 remain optimistic, with targets ranging from $160,000 to over $180,000.
A key driver of this trend is the rate at which ETFs are buying Bitcoin—currently 20 times faster than miners can produce it. ETF holdings have now surpassed the amount held by Bitcoin’s creator, Satoshi Nakamoto. At the same time, 69% of Bitcoin’s supply is held by individual investors, reducing the number of coins available for trading. With such a limited supply, even a slight increase in demand could push prices significantly higher.
If Bitcoin falls below $95,000, over $1.52 billion in leveraged long positions could be liquidated. However, the fact that Bitcoin remains above this level despite heavy selling suggests strong institutional interest. The last time Bitcoin saw this level of daily selling pressure was during the collapse of Three Arrows Capital in 2022. This signals that long-term holders continue to accumulate while selling activity is declining.
Michael Saylor recently pointed out that billionaires buying large amounts of Bitcoin could further strain supply, potentially driving prices higher. Meanwhile, discussions about government-backed Bitcoin reserves are gaining momentum in the U.S., with 20 states proposing bills to establish such reserves. If governments start acquiring Bitcoin, the amount available on exchanges will shrink even further.
With 94.3% of Bitcoin already mined and an unknown amount lost, supply is becoming increasingly scarce. While macroeconomic factors like interest rates and global trade policies will continue to influence Bitcoin’s price, the ongoing decline in exchange reserves suggests another major rally could be on the horizon.