Bitcoin Exchange Supply Shock Not Real: Glassnode Busts Myth

The on-chain analytics agency Glassnode has revealed how a well-liked delusion surrounding the decline of the Bitcoin alternate provide isn’t actual.

Obtainable Bitcoin Provide Hasn’t Really Dropped A lot

In its newest weekly report, Glassnode has mentioned a few false impression that’s broadly held within the Bitcoin neighborhood across the decline within the Steadiness on Exchanges throughout this cycle.

The “Steadiness on Exchanges” right here refers to an on-chain indicator that, as its title suggests, measures the overall quantity of the cryptocurrency that’s sitting within the wallets of all centralized exchanges.

Usually, one of many primary the reason why buyers deposit to the exchanges is for selling-related functions, so the Steadiness on Exchanges is commonly checked out because the obtainable promote provide of the asset. Will increase within the metric, due to this fact, are thought of bearish for BTC’s value, as they counsel extra holders are prepared to half with their tokens. Equally, declines could be assumed to be bullish.

Now, right here is the chart for the Bitcoin Steadiness on Exchanges shared by the analytics agency within the report:

The worth of the metric seems to have seen a plunge in current months | Supply: Glassnode’s The Week Onchain – Week 4, 2025

As displayed within the above graph, the Bitcoin Steadiness on Exchanges was sitting at 3.1 million BTC in July 2024, however as we speak, it has declined to only 2.74 million BTC. It is a vital lower and has made many consider that this represents the creation of a ‘provide shock‘ for the asset.

Glassnode thinks in any other case, nevertheless, because the analytics agency has defined:

Whereas many interpret this as a type of provide shock attributable to a mass of cash being withdrawn by particular person buyers—doubtlessly creating upward value strain—we consider nearly all of this decline stems from cash reshuffling into ETF wallets managed by custodians like Coinbase.

The spot exchange-traded funds (ETFs) are funding automobiles that had been launched within the US at the start of final 12 months. They provide an alternate technique of gaining publicity to the asset, in a mode that’s acquainted to conventional buyers. This mode of BTC investing has rapidly gained recognition and as we speak, the spot ETFs management a notable quantity of the availability.

“After the SEC permitted Bitcoin Spot ETFs in January 2024, eight of 11 spot ETFs chosen Coinbase as their custodian,” notes Glassnode. “As demand for ETF merchandise picked up, a major migration of cash from alternate wallets into Coinbase’s institutional custodian wallets occurred.”

Under is the chart shared by the analytics agency that exhibits the pattern within the holdings of those spot ETFs.

Appears just like the ETFs mixed maintain 1.69 million BTC in the mean time | Supply: Glassnode’s The Week Onchain – Week 4, 2025

An fascinating image seems if the Bitcoin holdings of the spot ETFs are included with these of the exchanges.

How the mixed steadiness on exchanges and ETFs has modified over the previous few years | Supply: Glassnode’s The Week Onchain – Week 4, 2025

From the graph, it’s obvious that this mixed indicator is sitting at a price of three.04 million BTC proper now. That is about the identical degree as the place the market was in the beginning of 2024, proper earlier than the spot ETFs had been launched.

Primarily based on this, the analytics agency has concluded that the obvious decline within the Bitcoin Steadiness on Exchanges is extra more likely to signify a shift in market construction, relatively than a lower within the obtainable promote provide.