Key takeaways:
Bitcoin’s percent supply on exchanges has dropped below 11% for the first time since 2018.
Institutional adoption is accelerating BTC withdrawals from public exchanges.
Trust in centralized platforms is shaky post-FTX.
Bitcoin’s (BTC) percent supply on exchanges has dropped to near seven-year lows, falling below 11% for the first time since March 2018, according to Glassnode data.
The peak occurred around March 2020, when over 17.2% of the BTC supply was held on exchanges. Since then, over 6% of the total supply, or roughly 1.26 million BTC, has been withdrawn from exchange wallets.
Let’s examine the key reasons behind Bitcoin’s growing withdrawals from crypto exchanges.
Bitcoin’s HODLing rises to a two-year high
Bitcoin investors are holding onto their coins at the highest level in over two years, according to the latest Exchange Flows to Network Activity Ratio chart by CryptoQuant.
The ratio, measuring the volume of BTC flowing to exchanges relative to onchain network activity, has fallen to its lowest reading since early 2023, signaling subdued exchange deposits despite rising prices.
As of early June 2025, the 30-day moving average of the ratio sits near 1.2, well below its 365-day average and approaching -1 standard deviation.
Historically, such low levels have marked periods of strong conviction among long-term Bitcoin holders, with investors preferring cold storage to trading.
Related: Bitcoin eyes $115K by July, but strong US job data to threaten rally: Analysts
This reduces available supply, with fewer coins potentially up for sale even as Bitcoin nears all-time highs.
Institutional custodians replacing crypto exchanges
The rise of institutional custody solutions is another major factor behind Bitcoin’s decreasing supply across exchanges.
Instead of public exchanges, large financial institutions like BlackRock, Fidelity, and Franklin Templeton prefer third-party custody platforms.
Coinbase Prime, for example, reported over $212 billion in assets under custody in Q1 2025, driven by “inflows from ETF issuers, corporations, and high net worth individuals.”
The Coinbase crypto exchange, on the other hand, witnessed over $500 million worth of BTC outflows in the same quarter.
The outflows have continued into the second quarter, including 761 million worth of withdrawals witnessed on June 5.
ETFs have attracted a large portion of the Bitcoin to their coffers.
The net worth of assets managed across spot Bitcoin ETFs was $44.54 billion as of June 5, up from around $1 billion at their launch in January last year.
Supporting this trend, a 2025 survey by Coinbase and EY-Parthenon found that 83% of institutional investors plan to increase their crypto exposure, with nearly 60% allocating over 5% of their AUM to digital assets.
About 61 public companies already control over 3% of the total Bitcoin supply of 21 million tokens, according to Standard Chartered.
Trust in exchanges dwindles post-FTX collapse
Following the collapse of FTX in late 2022, Bitcoin experienced a dramatic shift in exchange flows, as seen in the Glassnode chart.
The net transfer volume (red bars) shows sustained outflows through early to mid-2023, marking one of the biggest withdrawal periods in Bitcoin’s history.
From November 2022 to May 2023, weekly outflows repeatedly exceeded 10,000 BTC, totaling well over 200,000 BTC withdrawn from centralized exchanges.
This suggests that trust in crypto exchanges has declined since the FTX collapse, accelerating Bitcoin withdrawals to self-custody and alternative platforms for trading.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
