Bitcoin Supply on Exchanges Hits Multi-Year Low as Illiquid Holdings Reach New Peak

According to the latest blockchain data, bitcoin supply dynamics are undergoing a significant shift. Exchange reserves have declined to their lowest levels in four years, while illiquid BTC holdings—tokens controlled by long-term investors with no intention of immediate trading—have surged to unprecedented levels. This dual trend suggests a fundamental change in market structure and investor behavior.

Illiquid BTC Accumulation Breaks Records at 14.8 Million Tokens

Data from Glassnode reveals that illiquid bitcoin supply has climbed to an all-time high of 14.8 million BTC, representing 75% of the current circulating supply of approximately 19.99 million tokens. Over the past 30 days alone, illiquid holdings increased by more than 185,000 BTC—the second-highest monthly accumulation this year. This metric reflects a clear behavioral shift: investors are prioritizing accumulation over trading activity.

“Illiquid supply” measures bitcoin held by long-term holders (LTHs) that remains dormant in wallets rather than circulating through active trading channels. The record accumulation suggests that the dominant investor cohort is consolidating positions rather than booking profits at current levels.

Exchange Reserves Drop to Four-Year Lows Amid Bitcoin Supply Realignment

The inverse indicator to rising illiquid supply is the sharp decline in bitcoin holdings on centralized exchanges. Currently, exchange balances have fallen just below 3 million tokens—approaching their lowest point in approximately four years. Within the five-year historical range of 2.7 to 3.3 million BTC on exchanges, current levels represent the lower boundary.

This acceleration in bitcoin supply leaving exchanges began in early November and represents a marked reversal of a two-year trend where exchange reserves remained relatively stagnant. The rapid exodus suggests renewed confidence among investors regarding self-custody and off-exchange accumulation strategies.

Long-Term Holders Transition to Accumulation Phase

Evidence from recent on-chain activity indicates that LTHs have shifted from profit-taking to net accumulation. Since late November, this cohort has added over 2,000 BTC to their collective holdings. Such behavior typically signals the conclusion of a selling phase and the beginning of a structural consolidation period—a dynamic that could reduce ongoing sell-side pressure on spot markets.

Bitwise’s research head commented on this supply structure transformation: “Bitcoin’s supply scarcity continues to intensify, with nearly 75% now classified as illiquid while less than 14% remains accessible on exchanges. This concentration underscores growing structural support for further price appreciation.”

Market Technicals: Short Squeeze Rally and Resistance Zones

At the time of latest data update (February 26), BTC has recovered to $67.97K with a 24-hour gain of +2.47%. The recent price rebound—propelled by aggressive short liquidations—energized altcoin markets, with Ethereum, Solana, Dogecoin, and Cardano recording corresponding rallies.

However, market observers at LMAX Group cautioned that the bounce may reflect technical positioning normalization rather than fundamental buying pressure. Joshua Lim from FalconX noted that some institutional participants are rotating capital into high-volatility altcoins and derivatives, a pattern often associated with tactical positioning rather than conviction-driven accumulation.

For a sustainable uptrend, Bitcoin must establish support above key technical resistance points. The $72,000 and $78,000 levels represent critical barriers; sustained closes above these thresholds would signal genuine structural bullish momentum rather than a mean-reversion bounce.

The Bigger Picture: Supply Concentration as Market Foundation

The convergence of illiquid supply reaching all-time highs with bitcoin exchange reserves hitting multi-year lows paints a coherent narrative: long-term holders are accumulating while remaining off-exchange, reducing immediate selling supply while preserving optionality. This supply-side consolidation provides structural underpinning for potential future appreciation—assuming technical resistance can be overcome with sustained buying interest.