Cracking the Bitcoin Code: What Secrets Lie Beneath the Vanishing Exchange Reserves?

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Bitcoin exchange reserves are approaching a seven-year low as hedge funds increasingly invest in the cryptocurrency. Despite the possibility of a supply shock-driven rally, Bitcoin lacks the trading volume needed to surpass the $100,000 resistance level, according to analysts. As of January 13, Bitcoin reserves across all cryptocurrency exchanges have fallen to 2.35 million BTC, the lowest since June 2018 when Bitcoin traded above $7,000, based on CryptoQuant data.

The decreasing supply on exchanges is likely due to institutional participants purchasing Bitcoin at discounted rates. André Dragosch, head of research at Bitwise, noted that crypto hedge funds are buying the current dip in Bitcoin. This increase in hedge funds’ market exposure to Bitcoin may signal a shift as the asset’s availability continues to decline.


A potential supply shock could foster a price rally if buyer demand strengthens amid a diminishing amount of available Bitcoin. In December, U.S. spot Bitcoin exchange-traded funds acquired nearly three times the number of coins produced by miners as the cryptocurrency reached an all-time high of $108,300 on December 17.

While the 2025 outlook for Bitcoin remains optimistic, the $100,000 psychological mark stands as a significant barrier. Ryan Lee, chief analyst at Bitget Research, stated that the market shows signs of stabilization and potential consolidation. However, technical analysis reveals low trading volumes, indicating insufficient momentum to break through existing resistance or support levels.

The broader cryptocurrency market also suffers from a lack of trading activity, with trading volumes dipping to levels from before the U.S. elections, according to Santiment, a market intelligence platform. Despite current conditions, some analysts anticipate Bitcoin could reach a cycle top above $150,000 in late 2025, fueled by a projected $20 trillion increase in the global money supply, potentially drawing $2 trillion of investment into Bitcoin.