supply shock Archives - Coin Engineer

Bitcoin Supply on Exchanges Hits November 2017 Levels

Yeliz Akmaca — Mon, 16 Mar 2026 10:00:30 +0000

Actually, Bitcoin balances on exchanges have fallen to levels unseen since November 2017. Liquidity is shrinking. That means the market becomes more sensitive to demand fluctuations. Santiment reports that the percentage of Bitcoin held on centralized exchanges has reached the lowest point in eight years. This shift confirms investors are moving from short-term trading to long-term holding. Luckily, on-chain metrics clearly illustrate this trend.

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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Bitcoin Transaction Fees Hit 2025 Peak!

Yeliz Akmaca — Mon, 19 May 2025 09:00:13 +0000

Bitcoin transaction fees have reached a new high in 2025. As BTC price nears $106,000, blockchain demand surges. According to The Block’s data, the average transaction fee has risen by $1 since early May. It currently stands at $2.40, the highest level this year. The primary reason for this increase is the growing transaction demand on the network, driven by Bitcoin’s price approaching $106,000. During peak times, users tend to pay higher fees to have their transactions confirmed faster due to limited block capacity. This has led Bitcoin’s transaction fees to hit their highest levels in 2025.

Bitcoin Price and Transaction Fees Rise

Bitcoin’s price hit $105,600 on May 12 before reaching $106,000 on Sunday. However, it soon dropped to $104,500. Despite this, transaction fees continue to climb. The Block’s seven-day moving average data shows fees have reached $2.40. Additionally, Bitcoin’s market dominance has recovered after a decline two weeks ago, indicating a liquidity-driven fluctuation. Dominance peaked at 64.4% on May 8 but fell to 61% by May 19. This coincided with Ethereum (ETH) increasing its market dominance to 9.75% and altcoins rising to 22.35%. Stablecoins’ total market dominance dropped to 6.3%.

Transaction Count Drops While Supply Tightens

Despite rising fees, the daily transaction count is declining. The average transaction count, which was 507,000 in April, dropped 35% to 330,000. According to Glassnode data, Bitcoin’s illiquid supply—a measure of BTC held in wallets with minimal spending activity—is increasing. Exchange supply is decreasing, and this metric recently hit a new all-time high. This could create a supply shock if demand rises.

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Bitcoin DeFi Surge May Boost BTC Demand and Adoption

Yigit Taha OZTURK — Fri, 04 Apr 2025 13:00:26 +0000

The value locked in Bitcoin-based decentralized finance (BTCFi) has grown over 2,700% in the past year, potentially transforming BTC from a passive store of value to a productive, yield-bearing asset, according to a Binance Research report.

BTCFi is a fast-evolving sector that integrates DeFi functionality into Bitcoin’s base layer. The total value locked in BTCFi now exceeds $8.6 billion.

“The growing value of BTCFi, coupled with potential interest rate cuts, may reinforce positive sentiment for Bitcoin in the medium to long term,” Binance wrote in the report.

New Yield Opportunities Through BTCFi

A Binance spokesperson noted that continued growth of BTCFi could allow BTC holders to generate yield via lending, liquidity provision, and other DeFi tools — shifting its perception from a store-of-value to a productive on-chain asset.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

Interest in BTCFi spiked following the April 2024 Bitcoin halving, which introduced Runes, the first fungible token standard built on the Bitcoin blockchain.

Notable BTCFi initiatives include:

Babylon enabled BTC staking for the first time, allowing passive income.
Hermetica launched USDh, the first Bitcoin-backed synthetic dollar, offering 25% yield to investors.

Long-Term Holders Resume BTC Accumulation

According to Binance Research, BTC long-term holders — defined as wallets holding Bitcoin for at least 155 days — have resumed accumulation. This has reduced supply on exchanges, potentially setting the stage for a supply shock-induced price rally.

The trend aligns with broader Bitcoin adoption, including growing institutional interest and the establishment of a strategic reserve.

Donald Trump Signs Bitcoin Reserve Order at White House

On March 7, Donald Trump signed an executive order to form a strategic Bitcoin reserve using seized BTC assets. The move preceded the first White House Crypto Summit, which sparked mixed reactions from the crypto community.

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