New data from on-chain analytics firm Glassnode reveals that the amount of Bitcoin (BTC) held on exchanges has dropped significantly, reaching levels not seen since the 2017 all-time high. Currently, less than 12% of the total BTC supply resides in exchange wallets. This decrease in exchange balances follows a period of increased activity during the 2023 BTC price surge, where the BTC/USD pair more than doubled from its cycle lows. However, since late April, there has been a reversal in the trend, with more coins leaving exchanges.

Historic Milestone: Lowest Bitcoin Supply on Exchanges

On July 10, Glassnode reported that only 11.59% of the available BTC supply is currently held in known exchange wallets. This is the lowest percentage since mid-December 2017 when Bitcoin reached its previous all-time high of $20,000. William Clemente, co-founder of crypto analysis firm Reflexivity Research, commented on this milestone, stating that “Only 11.5% of Bitcoin supply left on exchanges, lowest in over 5 years.”

Exchange Balances Similar to March 2018 Levels

The total BTC balance in known exchange wallets, such as Coinbase, has dropped to levels last seen in March 2018. As of July 10, these wallets hold a total of 2.252 million BTC. Joe Burnett, head analyst at mining firm Blockware, pointed out that BTC balances on Coinbase have more than halved since the cross-market crash in March 2020. This trend of decreasing exchange balances has led some analysts to believe that Bitcoin is on the verge of true price discovery.

Bitcoin Whales and the Exception

While exchange balances continue to decrease, there has been an increase in the number of Bitcoin whale entities. These entities are individuals or organizations with the largest wallet balances outside of exchanges. Since late April, around 40 new whales have emerged. On July 7, their numbers reached the highest level since the FTX meltdown in November last year. One interesting exception to the overall trend of decreasing exchange balances is mining pool Poolin, which continues to send large amounts of BTC to Binance.

The decreasing supply of Bitcoin on exchanges, coupled with increasing buyer demand, has led to expectations of a BTC price squeeze. Additionally, there is growing anticipation that the United States may soon approve a Bitcoin spot price exchange-traded fund (ETF), which could further impact the market. Some experts also believe that advancements in artificial intelligence (AI) will have a similar effect on Bitcoin over time.

The latest data shows a significant decrease in the amount of Bitcoin held on exchanges, reaching levels not seen since the 2017 all-time high. This downward trend in exchange balances is accompanied by an increase in the number of Bitcoin whale entities. While the overall market is experiencing a decrease in supply on exchanges, mining pool Poolin remains an exception. The implications of these developments on the price of Bitcoin and the crypto market as a whole are yet to be fully understood.

Analysis

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