Bitcoin Supply on Exchanges Drops to 2018 Levels: Potential Supply Shock Ahead
According to Cointelegraph, the percentage of Bitcoin (BTC) held on exchanges has fallen below 11% for the first time since March 2018, reaching a near seven-year low. This marks a significant decrease from the peak in March 2020, when over 17.2% of the BTC supply was held on exchanges. Since then, more than 6% of the total supply, or approximately 1.26 million BTC, has been withdrawn from exchange wallets.
Several factors are driving this trend. Institutional adoption is accelerating BTC withdrawals from public exchanges, with large financial institutions such as BlackRock, Fidelity, and Franklin Templeton opting for third-party custody platforms. For example, Coinbase Prime reported over $212 billion in assets under custody in Q1 2025, while the Coinbase exchange saw over $500 million in BTC outflows during the same period. Spot Bitcoin ETFs have also attracted significant inflows, with assets under management reaching $44.54 billion as of June 5, up from around $1 billion at their launch in January 2024.
Trust in centralized exchanges has diminished following the FTX collapse in late 2022. From November 2022 to May 2023, weekly outflows from exchanges repeatedly exceeded 10,000 BTC, totaling well over 200,000 BTC withdrawn. This shift reflects a growing preference for self-custody and alternative trading platforms.
