Chainfeeds Guide:
Institutional Demand May Trigger Global BTC Supply Shortage.
Article Source:
https://mp.weixin.qq.com/s/DcaOi2TM3SC_7gSU8ovP7Q
Article Author:
Blockchain Knight
Perspective:
Blockchain Knight: The decline in BTC supply on exchanges is widely interpreted as a signal that investors are moving BTC from platforms to private self-custody wallets. This behavior is typically associated with a long-term holding (HODLing) strategy, as investors withdraw tokens from exchanges to reduce potential selling risks due to platform convenience. Since the beginning of 2023, withdrawing BTC from exchanges has been an ongoing trend, with exchange BTC reserves at around 3.2 million coins at that time. Over the past year, this trend has accelerated with the participation of major institutional investors. Institutional demand for BTC could be a key factor driving supply shortage. For example, giants like Fidelity have recently significantly increased their BTC holdings, with Fidelity alone purchasing BTC worth $253 million, directly exacerbating token outflows from exchanges. Well-known crypto asset trader Cas Abbe noted on social media: "BTC exchange supply has dropped to its lowest level since the third quarter of 2018. Currently, only 2.5 million BTC remain on exchanges, a decrease of 500,000 from the fourth quarter of 2024. A few days ago, Fidelity mentioned that institutions are continuously buying and withdrawing BTC from exchanges. Supply + Demand = Price Explosion." According to Coinbase's latest survey, over three-quarters of institutional investors plan to increase their digital asset allocation in 2025, with many institutions already using BTC for portfolio diversification and as a hedge against macroeconomic uncertainty. Additionally, listed companies represented by Strategy are actively accumulating BTC. Since November 2024, these companies have withdrawn over 425,000 BTC from exchanges, with a cumulative holding near 350,000. The reduction in BTC supply on exchanges impacts the market in several ways, including reduced selling pressure. As the immediately available BTC quantity decreases, the risk of large-scale selling is lowered, which helps stabilize or even drive up prices. If demand continues to grow while supply remains constrained, the market may face a supply shortage, which historically often leads to sharp price increases. On-chain analyst Willy Woo commented: "BTC fundamentals have turned bullish, and the conditions for breaking historical highs are ripe." The shift towards self-custody and long-term holding reflects the maturity of the crypto asset market, where both retail and institutional investors increasingly view BTC as a strategic asset rather than a speculative tool. The decline in BTC supply on exchanges is generally seen as a bullish signal, but also means that surging demand may cause increased price volatility. In the coming weeks, the market will test whether this supply shortage will drive BTC to a new price rally or if market sentiment will change with new macroeconomic data.
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