Bitcoin reserves on cryptocurrency exchanges have reached their lowest point since 2018, indicating a potential supply shock as institutional investors increase their buying activity.
According to CryptoQuant, the total reserves declined to 2.35 million BTC by January 13, which can be attributed to consistent accumulation by large-scale players.
This decrease in supply aligns with the growing involvement of hedge funds, who are reportedly taking advantage of the market dip to expand their crypto portfolios. André Dragosch, the research head at Bitwise, has observed a rising correlation between hedge fund performance and Bitcoin, suggesting a stronger commitment to the asset.
A supply squeeze may be approaching as demand continues to outpace supply. In December, U.S. Bitcoin ETFs purchased almost triple the amount of Bitcoin mined, driving the cryptocurrency to a record high of $108,300. However, analysts warn that low trading volumes could impede Bitcoin’s rise above the critical $100,000 level in the short term.
The broader crypto market is experiencing a similar stagnation, with trading activity reaching a two-month low. Analysts maintain cautious optimism, projecting that macroeconomic trends such as an anticipated surge in global liquidity could propel Bitcoin to new highs, potentially surpassing $150,000 by late 2025.