Bitcoin’s Supply Squeeze: What Happens When the Entire BTC Supply Disappears From Exchanges?

While Bitcoin’s price consolidates near the critical $110,000 level, a powerful story is unfolding on-chain. Three key trends; massive accumulation by long-term holders, a rapidly shrinking supply on exchanges, and signs of institutional buying, are painting a deeply bullish picture for BTC’s long-term trajectory.

As Bitcoin hovers around $109,000, up nearly 4% in the last 24 hours, these underlying metrics suggest a strong foundation is being built for the next major leg up.

According to on-chain analyst Axel Adler Jr., long-term holders (LTHs), often considered the “smart money” in the market, have added over 1.15 million BTC to their wallets since the price was at the $83,000 level. This staggering accumulation, valued at over $125 billion at current prices, occurred primarily in the $61K–$83K range.

This puts the new cohort of LTHs at a comfortable average unrealized profit of 51%. The fact that this group is holding strong without taking profits, even as the price rallies, is a classic signal of high market confidence and reinforces the view that Bitcoin’s macro bullish structure remains firmly intact.

While LTHs show conviction, the retail market is showing signs of renewed speculative fever. Data from Santiment reports the second-largest spike in retail “fear of missing out” (FOMO) over the past two weeks. Historically, such spikes can be a contrarian indicator that often marks local tops.

Yet, this time, the broader market structure tells a more nuanced story. , Coinbase Premium–a key indicator of US institutional demand–has been climbing. Whale activity has also picked up incrementally, supporting the case for institutional-driven price appreciation, which is typically more sustainable than retail-led pumps.

a 550,000 BTC outflow from exchanges over the past year. In July 2024, exchanges held around 1.55 million BTC. Today, that number has fallen to just 1.01 million–a 35% drop.

This sharp decline in exchange balances suggests that investors aren’t looking to sell but are staking a claim for the long term. In other words, Bitcoin is being treated more like digital gold than a speculative trading asset.