Institutional Demand Fuels Bitcoin Shortage on Exchanges
Bitcoin reserves on cryptocurrency exchanges have dropped to their lowest level in three years, raising concerns about a potential supply shock as institutional investors continue to accumulate the asset. Data from CryptoQuant indicates that exchange reserves now stand at 2.5 million BTC, the lowest since 2022.
A supply shock occurs when strong buying pressure meets a diminishing available supply, often leading to significant price appreciation. With institutional demand, particularly from exchange-traded funds (ETFs), continuing to grow, the market is witnessing a tightening of available Bitcoin.
Bitcoin Holds Above $95,000 Despite Market Pressures
Bitcoin has maintained its position above the crucial $95,000 support level despite significant selling pressure and macroeconomic concerns. In the past 24 hours, BTC has risen by 0.4%, trading at over $97,000 at the time of writing. This resilience comes amid growing uncertainty in global trade following the imposition of new import tariffs by the United States and China.
Bitcoin exchange reserves, all exchanges. Source: CryptoQuant
Despite experiencing the largest daily selling pressure since the collapse of Three Arrows Capital (3AC) in June 2022, Bitcoin has managed to sustain its value. Analysts suggest this is due to strong institutional interest and signs of “seller exhaustion.” According to Ryan Lee, chief analyst at Bitget Research, this phenomenon indicates that the market may be shifting from selling to buying pressure.
Lee further noted that broader economic factors, technological advancements, and key psychological support levels play a crucial role in stabilising Bitcoin’s price action. However, concerns remain over stagnating inflows into spot Bitcoin ETFs, which could continue to influence price movements.
ETF Outflows Add to Market Uncertainty
While institutional demand has been a driving force behind Bitcoin’s recent resilience, net outflows from US-based spot Bitcoin ETFs have raised concerns. On February 10, these ETFs recorded net negative outflows of over $186 million, wiping out the previous day’s net positive inflows of $171 million, according to Farside Investors.
Bitcoin ETF flows (US dollar, million). Source: Farside Investors
If Bitcoin fails to hold the $95,000 support level, analysts warn that the market could see heightened volatility. A correction below this level could trigger the liquidation of over $1.52 billion in leveraged long positions across all major exchanges, according to data from CoinGlass. Such an event could drive prices even lower in the short term.
Bitcoin’s Outlook for 2025 Remains Bullish
Despite concerns of a potential short-term correction below $90,000, long-term projections for Bitcoin remain optimistic. Many analysts predict a price surge throughout the rest of 2025, with estimates ranging between $160,000 and $180,000.
The diminishing supply on exchanges, coupled with sustained institutional interest, suggests that Bitcoin may be gearing up for another major rally. If the market continues to see strong demand amid tightening supply, prices could appreciate significantly in the coming months.
For now, maintaining the $95,000 psychological support level will be critical in preventing further downside volatility and ensuring bullish momentum for Bitcoin in the near future.
