Bitcoin Liquidity Hits Multi-Year Low: CryptoQuant Flags Bullish Setup

According to new data from CryptoQuant, Bitcoin’s sell-side liquidity is hitting critical lows—potentially laying the groundwork for the next major price rally.

The total BTC reserves held on centralized exchanges have fallen to just 2.4 million coins, the lowest level in several years. For comparison, reserves were above 3.1 million BTC as recently as mid-2023.

This ongoing drain of exchange-held Bitcoin is viewed by analysts as a signal of waning sell-side pressure. With fewer coins available for instant sale, the market could be entering a phase where supply scarcity drives price momentum upward.

CryptoQuant notes that this exact pattern played out during the 2020–2021 bull market, when a prolonged reserve downtrend preceded an aggressive price expansion. The logic is simple: when long-term holders and institutions pull BTC off exchanges—whether for cold storage, custody, or ETF vaulting—they reduce circulating supply and amplify the impact of any incoming demand.

Currently, Bitcoin is trading around $109,000, holding near recent highs. If exchange reserves continue to slide, analysts believe the environment could mirror prior breakout periods, especially given the continued appetite from ETF issuers and institutional allocators.

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What this means for Bitcoin

The drop in exchange reserves may signal strong conviction among investors, as fewer participants appear ready to sell. At the same time, spot ETF flows remain net positive, indicating persistent buying from both retail and institutional channels. If demand continues to outpace supply, this could form the basis for a renewed bullish leg.

While short-term volatility remains a risk, especially with macroeconomic uncertainties ahead, the current on-chain dynamics suggest a tightening market structure. Traders and long-term holders alike may interpret this as a bullish catalyst building beneath the surface—setting the stage for a potential breakout as Bitcoin’s liquidity crunch deepens.

Kosta Gushterov

Kosta has been working in the crypto industry for over 4 years. He strives to present different perspectives on a given topic and enjoys the sector for its transparency and dynamism. In his work, he focuses on balanced coverage of events and developments in the crypto space, providing information to his readers from a neutral perspective.