On-chain data has indicated that Bitcoin held in exchanges has dropped to a multi-year low of a little over 2.45 million BTC as of March 5. The decreasing reserves have reached the lowest level since 2022, when the amount stood at above 3.2 million BTC. The drop has raised speculations about the coin’s supply shock.
A supply shock is explained as a decrease in available BTC for purchase due to increased investor demand, and it is often tied to an eventual boost in the coin’s price. BlackRock analysts highlighted the possible problem with Bitcoin’s low supply and increasing demand, mentioning that ‘if every millionaire bought BTC, there would not be enough.’ The discussion used IBIT ETF’s increasing BTC supply as one of the indicators of the coin’s demand.
The asset management firm further insisted that despite the pre-programmed 21 million BTC tokens available in the coin’s maximum supply, over 4 million coins were lost due to forgotten private keys, lost addresses, and more. The analysts explained that BTC’s scarcity would impact its availability for large investors in the future.
Bitcoin exchange reserves have seen a sharp drop since November, when the amount stood at over 2.8 million BTC. The outflows from exchanges indicate an increased accumulation of the coin by investors. Analyst Miles Deutscher also pointed out that the activity showed increased confidence among investors despite BTC’s volatility seen in the past few weeks. Deutscher explained that more investors were choosing to buy the dip to hold BTC in cold storage.
The Bitcoin price has fluctuated over the past month, dropping to a little over $78,000 on February 28. The current BTC price, which is hovering above $89,000, is over $10,000 above the lows seen last week. The price has also surged over 8% in the past 24 hours and over 3% in the past 7 days despite being down over 5% in the past month.
Market uncertainty increases despite growing accumulation
Bitget’s Managing Director Gracy Chen reportedly commented during a recent Roundtable interview with host Rob Nelson about the fluctuations experienced in Bitcoin markets. Chen explained that large investors, including institutions and governments, were still cautious about entry into BTC investments. The Bitget executive also stated that Bitcoin’s price might possibly drop to around $72,000 despite the increased interest seen since Trump’s win in November’s presidential elections.
Chen further pointed out that the discussions among governments, including the U.S. and Czech Republic, were considering strategic BTC reserves but had not put the plans into action. The Bitget MD gave an example of President Trump’s plan to create a sovereign BTC reserve for the country, insisting that it was still more of a promise than an action. Chen explained that most governments and large investors would possibly wait for a better entry point before entering BTC markets.
The past few weeks have been shaky for crypto markets, with several political decisions increasing market volatility. Trump’s proposed 25% tariffs for Mexico and Canada, which were to be implemented on March 4, were one of the events that caused crypto volatility. The Federal Reserve’s bearish view of the country’s GDP also caused more uncertainty in the markets.
BTC funds outflow increases in the past few weeks
BTC ETF flows turned positive yesterday after eight days of continuous outflows. pic.twitter.com/m7Kx5lWHYQ
— Saint Pump (@Saint_Pump) March 1, 2025
As Chen pointed out, the reluctance among larger investors has been seen in the massive global Bitcoin investment fund outflows over the past few weeks. BTC exchange-traded funds (ETFs) saw over $2.7 billion in outflows last week, the largest outflows experienced in the funds since May last year. K33 Research’s Velte Lund mentioned that the outflows hit 14,579 BTC by February 28, marking several days of constant BTC exits from the funds.
U.S.-based BTC ETFs have had the largest outflows, with most of the larger funds, like BlackRock’s IBIT and Fidelity’s FBTC, recording some of the highest outflows. The ETFs have also seen significant outflows on March 3 and 4, recording $74.2 million and $143.5 million, respectively.
Other large investors are still accumulating, with entities like MicroStrategy working toward increasing their BTC holdings. MicroStrategy’s Michael Saylor revealed plans to raise $2 billion from 0% convertible senior notes to purchase more BTC. The asset management firm currently owns nearly 500,000 BTC as of the latest data. The South American country El Salvador is also continuing with its BTC accumulation plan despite the recent agreement to pause the project as per the IMF $1.4 billion loan deal.
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