Bitcoin Exchange Balances Hit 6-Year Low, Sparks Supply Shock Expectations

Bitcoin exchange balances have fallen below 2.9 million BTC to set a new 6-year record amid supply shock expectations. As the number of BTC on exchanges falls, bulls are rubbing their hands in glee at the prospect of a rally for the flagship cryptocurrency.

Bitcoin Exchange Balances Tumble Below 2.9 million

On-chain data from Glassnode has revealed the possibility of an incoming supply shock for Bitcoin. According to the data, the number of Bitcoins on exchanges have taken a hit to fall below the 2.9 million mark for the first time in six years.

Per the chart, the Bitcoin balance on exchange has been on a steady decline since mid-April. The balance fell from 3.05 million BTC to under 2.90 BTC at press time with 150,000 coins leaving exchanges to cold wallets. The last time exchange balance slipped below 2.90 million BTC was 2019 with the flagship cryptocurrency going on to gain 233% in the following years.

“Bitcoin exchange balances keep plunging, now at their lowest point in 6 years,” said Whale Insider on X.

Typically, a decline in Bitcoin exchange balance signifies a strong investors’ conviction in the asset as investors move coins from exchanges to cold wallets. On the flip side, a spike in exchange balance may signal sell pressure for the asset.

Furthermore, the top cryptocurrency leaving exchanges can trigger a supply shock as buyers jostle to grab available BTC on exchanges, a historical trigger for price rallies. However, Robert Kiyosaki predicts Bitcoin price to collapse in July, despite the bullish metrics around exchange balance.

ETFs And Treasury Companies Trigger The Decline

The steep drop in exchange balances correlates to the increased appetite by corporations buying Bitcoin. Last week, new Bitcoin treasury companies acquired 5,898 BTC, transferring assets from exchanges to long-term custody.

Between April and July, treasury companies have scooped over 100,000 BTC from exchanges in frantic fashion. Michael Saylor’s Strategy has signaled yet another Bitcoin purchase, setting the pace for ProCap Financial and GameStop.

Another reason behind falling exchange balances is a spike in interest for Bitcoin exchange-traded funds (ETFs). Credit rating giant S&P Global has reported an overwhelming response to Bitcoin ETFs since their launch. At the moment, over 800,000 BTC are held in ETF trust custody wallets, contributing to the decline in exchange balances.