• Bitcoin reserves on spot exchanges have dropped to their lowest level since 2017 
• Rising institutional demand amid the falling supply could trigger a prize squeeze 

Bitcoin (BTC), at press time, was trading at $101,718 on the charts following gains of 1.6% in 24 hours. As expected, the king coin continues to be the most dominant crypto in the market, with a market capitalization of  >$2 trillion. 

Alongside these recent gains though, demand for BTC has surged too. This has created a market imbalance due to falling supply. If these trends persist, Bitcoin might be facing a potential supply squeeze, one that could push its price higher. 

Bitcoin spot exchange reserves hit a 7-year low

Data from CryptoQuant highlighted the drop in Bitcoin’s supply after spot exchange reserves fell to their lowest level since mid-2018. In fact, the Bitcoin held on spot exchanges now stands at 1,055,716 BTC. 

These reserves have recorded a steep drop over the past month amid Bitcoin’s rally past $100,000 to new all-time highs. 

According to 10X Research, Coinbase, which has the highest Bitcoin reserves, recorded 72,000 BTC in outflows in the last 30 days. These outflows comprised nearly 10% of the exchange’s Bitcoin balance. 

29,000 BTC was also withdrawn from Binance within the same period, while Kraken’s outflows accounted for more than 7% of its total Bitcoin holdings. 

The exchange netflow data for the last 30 days also revealed that Bitcoin has recorded 22 days of negative netflows from spot exchanges. This is further evidence of a scenario where traders have not been keen on selling. 

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Author: Muthoni Mary

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