Exchange supply metrics track the portion of circulating Bitcoin held in wallets associated with centralized exchanges. Currently, approximately 1.15 million BTC is held on exchanges, representing just 5.74% of the total supply. In comparison, past market cycles show that before similar declines, exchange balances had exceeded 3 million BTC. This highlights the potential for a supply shock.

Liquidity Shrinks, Price Movements Intensify

As exchange balances drop, the number of coins immediately available in the market decreases. Actually, when coins move to private wallets or cold storage, supply tightens and price movements can become sharper. Order book depth diminishes; even relatively small buy or sell orders can move the market more aggressively.

Cryptoquant data shows that exchange reserves decreased from over 3.2 million BTC in 2024 to around 2.73 million BTC by March 2026. The market price is roughly $70,500, providing a clear comparison between supply and market value over multiple cycles.

Key exchange balances and percentages:

• Total BTC: ~21 million

• BTC on exchanges: ~1.15 million

• Exchange-held percentage: 5.74%

• Early 2024 exchange reserves: 3.2 million BTC

• March 2026 exchange reserves: 2.73 million BTC

Scarcity Dynamics and Long-Term Holding Trend

So, the drop in exchange reserves shows the long-term holding trend accelerating. Liquidity is decreasing, and the market is more sensitive. Even though over 20 million coins have been mined, the fact that less than 5% remain on exchanges strengthens scarcity dynamics. Supply tightens, and if demand rises, price impact grows larger.

Question: Why are Bitcoin exchange balances dropping and how does it affect prices?
Answer: As exchange reserves fall, fewer coins are immediately sellable. This makes price movements sharper during demand surges. Long-term holding strengthens, and scarcity increasingly impacts Bitcoin’s valuation.

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Data shows that since December 23, roughly 69,000 BTC in net realized losses have been recorded on-chain. This marks a clear departure from the profit-taking environment that dominated most of 2024 and 2025. Instead of distributing coins at a gain during price rebounds, investors are now choosing to crystallize losses.

A Quiet Shift in On-Chain Behavior

CryptoQuant emphasizes that this transition cannot be explained by price action alone. In fact, weakness in profit realization has been building for some time. On-chain metrics indicate that Bitcoin holders are stepping away from profitable distribution and prioritizing risk reduction instead. Historically, similar behavioral shifts have emerged when market conviction weakens and price recoveries fail to sustain momentum.

What stands out in the current phase is the absence of panic selling. Selling pressure is developing gradually rather than explosively. This suggests that while market participation remains active, confidence in directional continuation is eroding.

Signs of Fatigue in Profit Momentum

CryptoQuant data shows that realized profit momentum has been steadily deteriorating since early 2024. Rather than a single breakdown point, the market has produced a sequence of progressively lower realized profit peaks—first in January 2024, followed by December 2024, July 2025, and most recently October 2025.

This pattern reveals that even when spot prices appear resilient, each rally generates less profit-taking than the previous one. From an on-chain perspective, this reflects declining willingness among buyers to absorb supply at higher price levels, signaling weakening demand strength.

Parallels With the 2021–2022 Market Transition

CryptoQuant analysts note that the current on-chain structure bears striking similarities to BTC 2021–2022 bull-to-bear transition. During that cycle, realized profits peaked in early 2021 and then formed lower highs throughout the year before flipping into net realized losses ahead of the 2022 bear market.

That loss realization phase coincided with a broader psychological shift—from optimism toward capital preservation—and unfolded alongside a prolonged market decline. While history does not repeat mechanically, CryptoQuant frames the resemblance not as a forecast, but as a structural warning signal.

Where Is Market Balance Headed?

CryptoQuant stresses that net realized losses alone do not guarantee an immediate price collapse. However, in past cycles, extended loss realization phases have typically aligned with weaker market sentiment and diminishing speculative appetite.

If the current trend persists, Bitcoin rallies may increasingly encounter selling pressure, while downside volatility becomes more visible as the market searches for a new equilibrium. The direction remains unresolved, but on-chain data suggests the market is operating under noticeably tighter conditions than before.

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In global markets, Bitcoin and gold prices are climbing due to investors’ expectations surrounding the Fed’s interest rate decision. Gold rose 0.7% on Tuesday, reaching $3,357, while Bitcoin trades around $97,500. Conflicts in the Middle East, Trump-era trade tariffs, and energy price fluctuations are driving this trend. Experts predict the rally may continue. However, market uncertainty keeps investors cautious. 

How Will the Fed Decision Shape Markets?

The Fed plans to maintain interest rates at the 4.25%-4.50% range. Still, Jerome Powell’s statements will be pivotal for markets. Analysts say if Powell signals a June rate cut, Bitcoin could surpass $100,000. In contrast, a hawkish stance might trigger price declines. Investors are closely monitoring Powell’s speech. 

“This meeting is going to be strange. The Fed has no estimate to communicate about the next few meetings. The Fed needs to wait for two things: to see the policy actually go into effect. But then, when it does, it has to see how inflation expectations react. So the Fed needs to delay and then slow down.”

READ:Ethereum Pectra Upgrade Goes Live Today!

Global Tensions Bolster Safe-Haven Demand

Conflicts in the Middle East and global trade wars are pushing investors toward Bitcoin and gold. BitMEX founder Arthur Hayes argues that rising energy prices will boost Bitcoin demand. Additionally, gold remains a reliable asset during inflation and economic uncertainty. As a result, cautious optimism prevails in markets. Investors are diversifying portfolios to mitigate risks. 

Bitcoin and gold prices continue to rise amid the Fed’s interest rate decision and global uncertainties. Investors are focused on Powell’s upcoming statements. While technical indicators signal weaknesses in the crypto market, on-chain metrics and declining exchange reserves suggest a potential supply squeeze. 

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Bitcoin Supply in Profit Nears Euphoric Levels

CryptoQuant analyst Darkfost evaluates Bitcoin’s on-chain dynamics, focusing on the supply in profit. Specifically, the profit supply metric—the percentage of circulating Bitcoin valued higher than its purchase price—has surpassed 85%. This metric dropped to 75% during the recent correction but has rebounded with the price recovery. (Euphoria: A state of extreme optimism and excitement in the market, often associated with rapid price increases.) 

Historically, profit levels above 90% align with euphoric market phases. While this level has not yet been reached, the upward movement suggests euphoria. Darkfost notes that these phases often accelerate price increases but may lead to short-term pullbacks. Additionally, past cycles show the lowest profit supply at 45-50%, coinciding with bear markets. Thus, monitoring this metric is critical for identifying trend reversals. 

Related: PCE Inflation Report Could Trigger Crypto Market Surge 

Leverage Ratio and RSI: Market Aggression Declines

CryptoQuant analyst Crypto Lion examines leverage ratio and RSI data. Notably, CryptoQuant’s proprietary metric, which multiplies RSI by the open interest-reserve ratio, analyzes speculative positioning. Crypto Lion observes that RSI fluctuations are higher compared to the summer of 2021. However, leverage dynamics indicate the market is not overheating. Moreover, the market is shifting away from aggressive leverage, trending toward organic, spot-driven growth. 

As Bitcoin’s supply in profit rises, its price climbs above $94,000. Investors are eyeing the $100,000 psychological resistance. On-chain data suggests the market is approaching euphoria, but reduced leverage points to a healthier uptrend. At the time of writing, Bitcoin is trading at $94,551. 

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