Bitcoin Exchange Reserves Hit All-Time Low as Volatility Looms

Bitcoin exchange reserves have hit a record low of under 2.5 million BTC, coinciding with a price surge above $111,500. This drop in reserves, alongside institutional buying and strong ETF inflows, suggests potential for upcoming volatility in the market. Technical indicators show mixed signals, as Bitcoin navigates current trading pressures.

Bitcoin’s reserves on exchanges have plummeted to an unprecedented low, prompting speculation about an imminent surge in market volatility. According to CryptoQuant, the total Bitcoin (BTC) held on centralized exchanges has dipped below 2.5 million BTC as of late May 2025. Notably, this decline has occurred alongside a remarkable price rally, with Bitcoin recently soaring to an all-time high of over $111,500.

The data shows a stark contrast between the dwindling reserves of Bitcoin on exchanges and its rising market price. Chart data from CryptoQuant reveals a rising white line for Bitcoin’s price and a falling blue line for exchange reserves. Historically, a falling supply of Bitcoin on exchanges tends to push prices higher—especially when demand spikes. Many analysts believe this could signal the onset of a new market phase, where price movements become more pronounced due to limited supply.

A significant factor in this current market landscape seems to be institutional accumulation. Large holders, particularly wallets containing between 1,000 and 10,000 BTC, have been buying up Bitcoin steadily, with much of it moving into cold storage. In fact, Strategy added 7,390 BTC in May, boosting their total to 576,230 BTC—about 2.75% of the total circulating supply—acquired at an average cost of $69,726. Other companies, such as GameStop and Japan’s Metaplanet, are also noticeably increasing their Bitcoin assets.

In the past month, spot Bitcoin exchange-traded funds (ETFs) have seen an impressive $5.23 billion in inflows, per SoSoValue data. Governments are also catching on; for instance, the UAE and Pakistan are ramping up Bitcoin acquisitions, while U.S. lawmakers are mulling over the establishment of a national Bitcoin reserve.

From a technical standpoint, Bitcoin seems to be in a period of indecision. The momentum indicators paint a mixed picture. The relative strength index (RSI) is at 52, suggesting neutral momentum, whereas the moving average convergence divergence (MACD) has turned slightly bearish. Short-term moving averages indicate some pressure downwards, but the longer-term trend looks stable.

Currently, Bitcoin is trading significantly above both the 200-day exponential moving average (EMA) and simple moving average (SMA), which are trending upwards. If Bitcoin can bounce back to its short-term moving average of around $106,000, there’s potential for the rally to continue towards $110,000 or even higher. However, a drop towards $98,000 or lower could occur if it fails to hold its support levels.