Bitcoin Exchange Reserves Plummet to Record Lows: The Bullish Signal Traders May Overlook

As Bitcoin holds steadily above $90,000, the cryptocurrency market prepares for an eagerly awaited FOMC meeting, which could influence the next moves for risk assets. While many traders experience anxiety over price volatility, on-chain indicators reveal a distinctly different narrative behind the scenes. A recent report from CryptoQuant, conducted by XWIN Research Japan, indicates a significant decline in Bitcoin’s exchange reserves throughout 2025, despite the price correcting towards the $90,000 range.

Key Takeaways

Bitcoin exchange reserves have fallen to their lowest levels, signaling potential bullish sentiment.
The removal of BTC from exchanges indicates long-term accumulation by investors, rather than panic selling.
A decrease in liquid supply may lead to a future “supply shock” in the market.
Bitcoin currently hovers around $90,437, testing critical support levels as it navigates the effects of upcoming macroeconomic events.

The analysis highlights that the total Bitcoin held on centralized exchanges has decreased to 2.76 million BTC, marking one of the lowest recorded levels. This trend is particularly notable given its timing: during a steep sell-off in November and December, exchange balances fell sharply rather than increased. The report showcases this phenomenon in the red-marked area of the accompanying chart, illustrating accelerating outflows even as prices declined.

This unusual behavior suggests that investors are not sending their coins to exchanges for quick sales, but rather are withdrawing Bitcoin for long-term holding, which indicates confidence rather than panic. As volatility intensifies ahead of the FOMC decision, the contrast between short-term price fears and long-term accumulation emerges as a crucial factor influencing the current Bitcoin market.

Significance of Shrinking Exchange Reserves

The report underscores that the rapid decrease in Bitcoin’s exchange reserves carries significant structural implications for the market. A smaller number of coins on centralized exchanges means less Bitcoin is up for immediate sale, effectively limiting the liquid supply. According to the findings, this reduction is driven not by short-term traders but by long-term holders and institutional investors moving BTC into self-custody or cold storage.

Bitcoin Exchange Reserve | Source: CryptoQuant

The noteworthy aspect of this trend is its timing. Typically, sharp price declines prompt a wave of inflows into exchanges as investors brace themselves to sell or exit their positions. However, this cycle tells a contrasting story. Even as Bitcoin dipped into the $90,000 range, exchange balances continued to decline, indicating that long-term-minded buyers are accumulating rather than pulling back.

This discrepancy between price movements and on-chain trends indicates underlying strength. While short-term volatility may persist—especially with macroeconomic events like the FOMC meeting on the horizon—the overall structure suggests a market that is quietly tightening its available supply. As reserves approach historical lows, a potential “supply shock” becomes increasingly likely.

Despite a lackluster spot market performance, on-chain metrics are gradually starting to indicate bullish tendencies, suggesting that the groundwork for the next major trend may be being laid beneath the surface.

Bitcoin Tests Key Support Level as Market Awaits Direction

Currently, Bitcoin's price action on the 3-day chart reflects a market attempting to stabilize after a significant correction. Bitcoin is trading around $90,437, positioned just above the 200-day moving average, which has historically served as a major support level during mid-cycle pullbacks. The recent bounce from the $87,000–$88,000 range suggests that buyers are working to defend this area; however, the structure remains tenuous as long as prices linger below the 50-day and 100-day moving averages, both of which currently trend downward.

BTC consolidates around key level | Source: BTCUSDT chart on TradingView

The chart illustrates a clear shift in momentum. Following several months of steady higher lows, Bitcoin broke its upward trend in late November, leading to a rapid decline into the high-$80,000 range. The increase in volume during this drop indicates stronger activity from sellers. Nevertheless, the subsequent trading candles display a reduction in sell volume, suggesting that short-term sellers may be reaching exhaustion.

To initiate a meaningful recovery, Bitcoin must reclaim the $95,000–$97,000 zone, where previous support levels have turned into resistance. Failure to overcome this barrier may confine the market to a consolidation phase, with the risk of another test of the 200-day moving average.