Bitcoin (BTC-USD) reserves across exchanges are plummeting, reaching their lowest point in nearly seven years. As of January 13, the total reserve fell to 2.35 million BTC, a level not seen since June 2018, when Bitcoin was valued at just over $7,000, according to CryptoQuant data. This drop in Bitcoin supply signals that institutional investors, particularly hedge funds, are taking advantage of the current dip to accumulate Bitcoin at a discount.

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Institutional Buying Signals Possible Rally

According to André Dragosch, head of research at Bitwise, the shrinking supply of Bitcoin on exchanges points to the growing presence of institutional buyers. He explained that hedge funds are increasing their exposure to Bitcoin, which could set the stage for a “supply shock” where buyer demand exceeds available supply, driving prices up. In December, U.S. Bitcoin ETFs bought nearly three times the amount of coins mined, helping Bitcoin reach a new all-time high of $108,300 on December 17, Cointelegraph reported.

Trading Volume Keeps Bitcoin Below $100,000

Despite the institutional buying frenzy, Bitcoin faces a major hurdle: low trading volume. Analysts, including Ryan Lee from Bitget Research, warn that Bitcoin’s path to breaking the $100,000 resistance is unclear without higher trading activity. The broader crypto market is also grappling with “trading paralysis,” as reported by Santiment, further hindering potential momentum.

At the time of writing, Bitcoin is sitting at $91,077.87.