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

Keshav Verma

1 year ago

3 mins read

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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.

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.

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

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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