Crypto investors are eying a potential supply shock as Bitcoin reserves sink to a near seven-year low thanks to continued institutional buying.
Bitcoin (BTC) reserves across all cryptocurrency exchanges fell to 2.35 million BTC as of Jan. 13, which marks a near seven-year low not seen since June 2018, when Bitcoin was trading above $7,000, CryptoQuant data shows.
Bitcoin exchange reserves. Source: CryptoQuantThe falling Bitcoin supply on exchanges is likely attributed to continued discount buying by institutional participants, according to André Dragosch, head of research at Bitwise.
Crypto hedge funds are buying the current Bitcoin dip, the researcher wrote in a Jan. 13 X post:
“1 million beta of global hedge funds’ performance to BTC has increased from its recent cycle lows signaling increasing market exposure to Bitcoin & other crypto assets.”
Global crypto hedge fund beta. Source: Andre DragoschFalling Bitcoin supply on exchanges could signal an incoming price rally driven by a “supply shock,” which occurs when strong buyer demand meets a decreasing amount of BTC, leading to more price appreciation.
During December, US spot Bitcoin exchange-traded funds (ETFs) bought almost three times the nearly 14,000 coins produced by miners as Bitcoin reached a new all-time high of $108,300 on Dec. 17, Cointelegraph Markets Pro data shows.
Bitcoin recovery to $100,000 lacks trading activity
While Bitcoin’s trajectory for 2025 remains promising, analysts continue eying the $100,000 psychological mark as a significant resistance before more potential upside.
While a recovery above $100,000 may be imminent, the crypto market lacks trading activity for a significant rally, according to Ryan Lee, chief analyst at Bitget Research.
“Market sentiment appears to be stabilizing, with reduced selling pressure suggesting potential consolidation or an upward trajectory if the resistance is overcome,” the analyst told Cointelegraph.
”However, technical analysis reveals low trading volume on the daily timeframe, indicating a lack of decisive momentum to break through current resistance or support levels,” he added.
Beyond Bitcoin, the broader crypto market also suffers from a lack of trading activity.
The trading volume around some of the top cryptocurrencies sunk to an over two-month low not seen since before the United States elections, according to market intelligence platform Santiment’s Jan. 13 X post:
“Crypto trading volume has sunk as ‘trading paralysis’ has swept markets. Top projects across Layer 1’s, Layer 2’s, meme coins, and AI last saw this low level of trading on November 4th. The lack of excitement is a sign of FUD, which increases the probability of rebounds.”
Crypto trading volume dips to pre-Trump low. Source: Santiment
Still, analysts remain optimistic about Bitcoin’s trajectory, with some expecting a cycle top above $150,000 in late 2025, driven by a predicted $20 trillion increase in the global money supply, which could attract $2 trillion of investment into BTC.
