TL;DR
- Bitcoin exchange reserves drop to 2.35 million BTC, the lowest level in nearly seven years.
- Bitcoin’s price volatility has triggered over $670 million in liquidations in the last 24 hours.
- Despite the price drop, institutional interest in Bitcoin continues to rise, with hedge funds increasing their exposure.
Bitcoin exchange reserves have hit their lowest point since 2018, with only 2.35 million BTC circulating on trading platforms, according to CryptoQuant data. This drop, marking a near seven-year low, is primarily attributed to institutional investors purchasing Bitcoin at discounted prices, as they seize the opportunity to increase their holdings during the recent price corrections.
After starting the week strong, reaching $102,000 on Tuesday, Bitcoin’s price dropped more than $10,000 in the following 48 hours, hitting a low of $91,250 on the Bitstamp exchange on Thursday. Despite several attempts at recovery, the price has remained volatile, fluctuating between $91,000 and $93,000, reflecting uncertainty and ongoing market challenges.
Decline in Network Activity and Increase in Liquidations
According to CryptoQuant, BTC exchange reserves have been declining steadily since early December, when the cryptocurrency’s price began consolidating between $95,000 and $96,000. In addition to the drop in exchange reserves, Bitcoin’s network activity has reached its lowest level since November 2024. Indicators such as the “Short-Term Holders’ Spent Output Profit Ratio” (SOPR) have fallen below 1, suggesting that many short-term investors are selling at a loss, a sign of growing concern among retail investors about the stability of the market.
The price declines have triggered massive liquidations across the cryptocurrency market. According to Coinglass data, total crypto liquidations amounted to $670 million in the last 24 hours, with long positions being the most affected, accounting for 87.7% of total liquidations, highlighting the aggressive unwinding of leveraged positions in response to the recent price volatility.
Institutional Interest Continues to Rise
Despite the volatility, institutional interest in Bitcoin remains strong. According to André Dragosch, head of research at Bitwise, global hedge funds have increased their exposure to BTC. Data shows that the performance of these funds against Bitcoin has significantly risen, indicating growing interest in the cryptocurrency and other digital assets as part of their investment portfolios.
On the anniversary of the approval of Bitcoin exchange-traded funds (ETFs) in the U.S., these funds have shown impressive performance. Despite over $700 million in outflows over three days, Bitcoin ETFs reported net inflows exceeding $1 billion during the week ending January 10, 2025, highlighting continued institutional appetite for the asset, which suggests a strong belief in Bitcoin’s long-term potential.
