Home Bitcoin News Bitcoin’s Supply Squeeze Could Fuel Price Surge

Bitcoin’s Supply Squeeze Could Fuel Price Surge

Bitcoins supply

Bitcoin (BTC) has been experiencing a strong accumulation phase, with nearly 4.85 million BTC withdrawn from exchanges since 2020. This surge in withdrawals highlights an increasing trend among investors to hold onto their Bitcoin, removing it from centralized exchanges (CEX) and signaling a belief in Bitcoin’s long-term value. As more BTC gets taken off the market, there is speculation that this reduced supply could potentially set the stage for a price surge.

The recent trend in Bitcoin’s exchange withdrawals suggests that the cryptocurrency market might be headed towards a supply squeeze. A supply squeeze occurs when there is a reduction in the availability of an asset while demand remains steady or increases, which often results in price increases. With fewer Bitcoin tokens available for sale, the price could rise as demand continues to grow, especially if buyers are unable to access enough supply.

Data from crypto analytics firm Alphractal, founded by Joao Wedson, shows that the withdrawal of nearly 5 million BTC from exchanges since February 2020 represents a massive shift in how investors are approaching the market. This trend signals that many holders are adopting a “buy and hold” strategy, removing their Bitcoin from exchanges to keep it in their wallets for long-term storage. This behavior may contribute to a sustained reduction in the supply of Bitcoin available for trading, which could increase upward pressure on the asset’s price over time.

Technical indicators and on-chain data further support this outlook. According to IntoTheBlock, Bitcoin’s exchange flows have remained negative since January 21, 2025. This suggests that investors are still in the process of accumulating BTC, and fewer coins are being sold on exchanges. During the past week, Bitcoin’s price saw a decline of over 7%, dropping from a high of $109,000 to a low of $97,000. However, strong bids at lower prices quickly pushed the price back above the $100,000 mark. This price action indicates that despite the recent dip, buyers are actively stepping in to take advantage of discounted prices, reinforcing the notion of an ongoing accumulation trend.

Additionally, on platforms like Binance, the selling pressure has started to decrease. CryptoQuant observed a significant drop in the taker sell volume over the past week, signaling a decline in the activity of short-sellers. As sellers lose influence in the market, buyers are expected to take control, possibly leading to a price rally in the near term. This shift in market sentiment points to the possibility that Bitcoin could soon experience upward momentum as the market moves through the current phase of consolidation.

While the overall sentiment is bullish due to reduced selling pressure and increased accumulation, not all market participants are convinced that a rally is imminent. Arthur Hayes, co-founder of BitMEX, offers a more cautious viewpoint, predicting a potential 30% price correction for Bitcoin, with the price potentially dropping to the $70,000 to $75,000 range in the short term. He suggests that this correction could be followed by a massive rally, with Bitcoin possibly reaching $250,000 by the end of the year.

In conclusion, Bitcoin’s ongoing accumulation trend, fueled by the withdrawal of large amounts of BTC from exchanges, is raising the possibility of a supply squeeze that could push the price higher. While short-term fluctuations and potential corrections are always a factor in the volatile crypto market, the overall long-term outlook for Bitcoin remains bullish. Investors should stay informed about key market developments, such as the Federal Reserve’s upcoming rate decisions, as these could play a significant role in shaping Bitcoin’s future trajectory. With both bullish and bearish factors at play, it is essential for investors to monitor the market closely for potential opportunities.

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Maheen Hernandez

A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5

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