Bitcoin Supply Shock: Only 12% Of BTC Supply Is On Exchanges Now

Percentage of the Bitcoin supply on exchanges has dipped further down to 12% recently, as the supply shock continues to deepen.

Just 12% Of Bitcoin Supply Is Now Held By Exchanges

As pointed out by an analyst in a CryptoQuant post, the percentage of BTC supply stored on exchanges has now dropped down to just 12%.

The all exchanges reserve is an on-chain indictor that measures the total amount of Bitcoin currently held by wallets of all exchanges.

The “percentage of BTC supply on exchanges” is a metric that tells us the ratio between the exchange reserve and the total supply of the crypto.

When the value of this indicator moves up, it means exchange wallets are receiving a net amount of coins. As investors usually send their coins to exchanges for selling purposes, this supply is often referred to as the sell supply of the market. Therefore, an uptrend in it can be bearish for the price of the crypto.

On the other hand, when the metric’s value moves down, it means holders are withdrawing their Bitcoin from exchanges. Prolonged such trend can imply there is accumulation going on in the market, and the available supply is shrinking. Hence, downwards movement of the indicator can be bullish for BTC.

Related Reading | Bitcoin Miners Show Strong Accumulation As Their Inventories Spike Up

Now, here is a chart that shows the trend in the value of this metric over the past few years:

Looks like the supply on exchanges has been heading down since a while now | Source: CryptoQuant

As you can see in the above graph, the percentage of the Bitcoin supply on exchanges has shrunk down to just 12% now.

The indicator’s last all-time high (ATH) was made at around 16%. Since then, the metric has been steadily making its way down, and has now dropped 4% in value.

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Some traders believe that this decrease in the supply on exchanges may be creating a supply shock in the market. Such a scenario would be bullish for the price of Bitcoin in the long term.

However, some recent data goes against the narrative, arguing that the supply has merely redistributed itself in the form of investment vehicles like ETFs.

BTC Price

At the time of writing, Bitcoin’s price floats around $42.7k, up 3% in the last seven days. Over the past month, the crypto has lost 11% in value.

The below chart shows the trend in the price of the coin over the last five days.

BTC's price has once again started to move sideways in the $40k to $45k range over the last few days | Source: BTCUSD on TradingView Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

by Hououin Kyouma on January 18, 2022 at 12:30AM