Bitcoin Exchange Supply Shock Not Real: Glassnode Busts Myth

The on-chain analytics firm Glassnode has revealed how a popular myth surrounding the decline of the Bitcoin exchange supply isn’t real.

Available Bitcoin Supply Hasn’t Actually Dropped Much

In its latest weekly report, Glassnode has discussed about a misconception that’s widely held in the Bitcoin community around the decline in the Balance on Exchanges during this cycle.

The “Balance on Exchanges” here refers to an on-chain indicator that, as its name suggests, measures the total amount of the cryptocurrency that’s sitting in the wallets of all centralized exchanges.

Generally, one of the main reasons why investors deposit to the exchanges is for selling-related purposes, so the Balance on Exchanges is often looked at as the available sell supply of the asset. Increases in the metric, therefore, are considered bearish for BTC’s price, as they suggest more holders are willing to part with their tokens. Similarly, declines can be assumed to be bullish.

Now, here is the chart for the Bitcoin Balance on Exchanges shared by the analytics firm in the report:

The value of the metric appears to have seen a plunge in recent months | Source: Glassnode's The Week Onchain - Week 4, 2025

As displayed in the above graph, the Bitcoin Balance on Exchanges was sitting at 3.1 million BTC in July 2024, but today, it has declined to just 2.74 million BTC. This is a significant decrease and has made many believe that this represents the creation of a ‘supply shock‘ for the asset.

Glassnode thinks otherwise, however, as the analytics firm has explained:

While many interpret this as a form of supply shock caused by a mass of coins being withdrawn by individual investors—potentially creating upward price pressure—we believe the majority of this decline stems from coins reshuffling into ETF wallets managed by custodians like Coinbase.

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Author: Keshav Verma

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