BTC supply hits lowest level since 2018. What happened in the market?

According to CryptoQuant data, as of the end of April 2025, the supply of BTC held by centralized exchanges has fallen to the lowest level since 2019, with only about 2.5 million BTC left, a decrease of 500,000 from the end of 2024.

Exchange BTC supply shows a trend towards self-custody

The decline in the supply of BTC on exchanges is widely interpreted as a signal that investors are moving BTC from platforms to private self-custodial wallets. This behavior is often associated with a long-term holding (HODLing) strategy, as investors withdraw tokens from exchanges to reduce the risk of potential sell-offs due to the convenience of platform operations.

Withdrawing BTC from exchanges has been a growing trend since early 2023, when exchanges had about 3.2 million BTC reserves. Over the past year, this trend has accelerated with the participation of major institutional investors.

Institutional demand may trigger global BTC supply shortage

Institutional demand for BTC may become a key factor driving supply shortages. For example, giant companies such as Fidelity have recently significantly increased their holdings of BTC. Fidelity alone has purchased $253 million worth of BTC, which has directly exacerbated the outflow of exchange tokens.

BTC veteran Dennis Porter said excitedly: "We have never seen this before. A global BTC supply shortage has never happened. This is a major positive signal."

Well-known Crypto asset trader Cas Abbe also pointed out on social media: "BTC exchange supply has dropped to its lowest level since the third quarter of 2018. As of now, only 2.5 million BTC remain on the exchange, a decrease of 500,000 from the fourth quarter of 2024. A few days ago, Fidelity mentioned that institutions are continuing to buy and withdraw BTC from exchanges. Supply + demand = price explosion."

According to the latest survey by Coinbase, more than three-quarters of institutional investors plan to increase their allocation of digital assets in 2025. Many of these institutions have used BTC to diversify their portfolios and as a hedge against macroeconomic uncertainty.

In addition, listed companies represented by Strategy are also actively hoarding BTC. Since November 2024, these companies have withdrawn more than 425,000 BTC from exchanges, with a cumulative holding of nearly 350,000.

The impact of shrinking BTC supply on the market

The reduction in the supply of BTC on exchanges has several impacts on the market, including the reduction of selling pressure. As the number of BTC available for immediate sale decreases, the risk of large-scale sell-offs is reduced, which helps stabilize or even push up prices.

If demand continues to grow and supply continues to be limited, the market may face supply shortages, which have historically led to sharp price increases.

On-chain analyst Willy Woo commented: "BTC fundamentals have turned bullish, and conditions are ripe for a breakthrough in all-time highs."

The shift to self-custody and long-term holding reflects the maturity of the Crypto asset market, in which both retail and institutional investors increasingly view BTC as a strategic asset rather than a speculative tool.

The decline in the supply of BTC on exchanges is generally seen as a bullish signal, but it also means that a surge in demand may trigger increased price volatility. In the coming weeks, the market will verify whether this supply shortage will drive BTC prices to start a new round of gains, or whether market sentiment will change with the emergence of new macroeconomic data.