Bitcoin Exchange Reserves Hit Multi-Year Lows

Bitcoin exchange reserves have fallen to their lowest levels in years, signaling a growing preference among investors to hold the cryptocurrency for the long term. Data from CryptoQuant reveals that over 171,000 Bitcoin have been withdrawn from major exchanges since Donald Trump’s U.S. presidential election win on November 5.

This trend reduces Bitcoin’s liquid supply and reflects increased confidence among investors, who appear to be moving their holdings to cold storage as part of long-term strategies.

Long-Term Holding at Record Levels

Declining Exchange Reserves

Bitcoin reserves on cryptocurrency exchanges have been steadily declining since 2021. According to CryptoQuant, reserves stood at 3.2 million Bitcoin in October 2021 and have now dropped to a multi-year low of 2.46 million coins.

This reduction aligns with a broader shift toward holding, as investors increasingly view Bitcoin as a long-term store of value rather than a trading asset.

Rising Illiquid Supply

Glassnode data highlights that the illiquid supply metric—Bitcoin held by long-term investors not actively trading—has surged by 185,000 Bitcoin in the past 30 days, reaching an all-time high of 14.8 million coins. This represents 75% of Bitcoin’s current circulating supply of approximately 19.79 million coins.

Market Volatility Amid Tightening Supply

Price Dip and Liquidations

Despite the shrinking liquid supply, Bitcoin’s price has dipped, falling 2% below the $94,000 mark in the past 24 hours. This volatility has triggered significant liquidations among traders.

According to Coinglass, 207,454 traders were liquidated over the past day, with total liquidations reaching $578.6 million. Bitcoin accounted for $90 million of these liquidations, primarily from long positions betting on the cryptocurrency’s continued price growth.

A Contradiction of Signals

While declining reserves and rising illiquid supply suggest strong long-term confidence in Bitcoin, the price drop and trader liquidations highlight the ongoing volatility in the market. This juxtaposition underscores the unique dynamics of Bitcoin as both a speculative and a long-term investment asset.

A Shift in Market Sentiment

The continued decline in Bitcoin exchange reserves reflects a significant shift in investor behavior. With long-term holders now controlling a record percentage of the circulating supply, Bitcoin’s narrative as a store of value appears stronger than ever.

However, short-term market fluctuations, such as the recent price dip and liquidations, serve as a reminder of the cryptocurrency’s inherent volatility. As Bitcoin’s supply tightens, its long-term prospects remain robust, even as traders navigate a turbulent market.