In a recent tweet, the on-chain analytics platform Glassnode weighs in on the notion that falling exchange balances automatically indicate a supply shock, calling it a “meme.”
Bitcoin’s percent supply on exchanges fell below 15% for the first time since 2018, with some analysts seeing this as indicating a supply shock as institutional demand from exchange-traded funds (ETFs) grows. While lower Bitcoin on exchanges can reduce immediate selling pressure, the situation is more nuanced than a simple in-out metric.
“The idea that BTC balance on exchanges dropping = supply shock is a meme,” Glassnode said, adding that “doesn’t mean there aren’t real supply constraints building beneath the surface.”
“#BTC balance on exchanges dropping = supply shock” is a meme. But that doesn’t mean there aren’t supply constraints – long-term holders are absorbing more $BTC than miners issue. That’s where pressure builds. pic.twitter.com/OZtboXM0BM
— glassnode (@glassnode) July 12, 2025
According to Glassnode, long-term holders are absorbing more BTC than miners issue, which is where pressure builds.
Utilizing the “Long-term Holder Supply Storage vs. Issuance” indicator, Glassnode highlights that the long-term holder supply change is significantly larger than the monthly issuance.
This supports the view that supply-side conditions are tightening, as a wide base of holders continues to absorb newly issued supply. As the supply side continues to tighten, the market becomes more vulnerable to demand shocks, with even small swings causing major price volatility.
Bitcoin price activity
Bitcoin hit a new all-time high of $118,909 on Friday, capping a four-day rally that began with a low of $107,438 on July 8. This week’s move higher triggered a big wave of short liquidations, with more than $1.15 billion liquidated on Friday, the largest in a single day over the last four years.
The surge began more slowly on Wednesday, following the release of the minutes from the most recent Federal Reserve meeting. A rally in tech stocks also boosted the Bitcoin price.
At the time of writing, BTC was trading at $117,093, with traders expecting new highs in the coming months. Longer-term options expiring in late September and December have seen high open interest of $140,000 and $150,000, respectively.