The on-chain analytics firm Glassnode has revealed how a popular myth surrounding the decline of the Bitcoin exchange supply isn’t real.
Available Bitcoin Supply Hasn’t Actually Dropped Much
In its latest weekly report, Glassnode has discussed about a misconception that’s widely held in the Bitcoin community around the decline in the Balance on Exchanges during this cycle.
The “Balance on Exchanges” here refers to an on-chain indicator that, as its name suggests, measures the total amount of the cryptocurrency that’s sitting in the wallets of all centralized exchanges.
Generally, one of the main reasons why investors deposit to the exchanges is for selling-related purposes, so the Balance on Exchanges is often looked at as the available sell supply of the asset. Increases in the metric, therefore, are considered bearish for BTC’s price, as they suggest more holders are willing to part with their tokens. Similarly, declines can be assumed to be bullish.
Now, here is the chart for the Bitcoin Balance on Exchanges shared by the analytics firm in the report:
The value of the metric appears to have seen a plunge in recent months | Source: Glassnode's The Week Onchain - Week 4, 2025
As displayed in the above graph, the Bitcoin Balance on Exchanges was sitting at 3.1 million BTC in July 2024, but today, it has declined to just 2.74 million BTC. This is a significant decrease and has made many believe that this represents the creation of a ‘supply shock‘ for the asset.
Glassnode thinks otherwise, however, as the analytics firm has explained:
While many interpret this as a form of supply shock caused by a mass of coins being withdrawn by individual investors—potentially creating upward price pressure—we believe the majority of this decline stems from coins reshuffling into ETF wallets managed by custodians like Coinbase.
The spot exchange-traded funds (ETFs) are investment vehicles that were introduced in the US at the beginning of last year. They offer an alternate means of gaining exposure to the asset, in a mode that’s familiar to traditional investors. This mode of BTC investing has quickly gained popularity and today, the spot ETFs control a notable amount of the supply.
“After the SEC approved Bitcoin Spot ETFs in January 2024, eight of eleven spot ETFs selected Coinbase as their custodian,” notes Glassnode. “As demand for ETF products picked up, a significant migration of coins from exchange wallets into Coinbase’s institutional custodian wallets occurred.”
Below is the chart shared by the analytics firm that shows the trend in the holdings of these spot ETFs.
Looks like the ETFs combined hold 1.69 million BTC at the moment | Source: Glassnode's The Week Onchain - Week 4, 2025
An interesting picture appears if the Bitcoin holdings of the spot ETFs are included with those of the exchanges.
How the combined balance on exchanges and ETFs has changed over the past few years | Source: Glassnode's The Week Onchain - Week 4, 2025
From the graph, it’s apparent that this combined indicator is sitting at a value of 3.04 million BTC right now. This is about the same level as where the market was at the start of 2024, right before the spot ETFs were introduced.
Based on this, the analytics firm has concluded that the apparent decline in the Bitcoin Balance on Exchanges is more likely to represent a shift in market structure, rather than a decrease in the available sell supply.
BTC Price
Bitcoin has made recovery of about 3% in the past day, which has taken its price beyond $105,000.
The price of the coin seems to have retraced its recent plunge | Source: BTCUSDT on TradingView
