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Cryptocurrency analyst Vivek Sen noted in an X article that the supply of Bitcoin (BTC) is becoming increasingly limited, and balances on various exchanges have fallen to historic lows, making the primary crypto ready for a “supply shock.”
Will Declining Exchange Balances Lead to the Start of Bitcoin’s Sustained Recovery in 2026?
Bitcoin exchange signal a supply squeeze
A chart shared by Vivek Sen shows the massive exodus of Bitcoin from exchanges, with holdings falling from around 3.4 million BTC on March 21, 2025 to around 2.4 million on January 16, 2026.
This sharp decline has occurred in less than a year and suggests that investors are aggressively pulling Bitcoin from exchanges and moving it to cold wallets and crypto storage platforms, further fueling the crypto’s upside potential.
As Bitcoin flows from exchanges to private wallets and storage solutions, the pool of tradable coins shrinks—a dynamic that can increase price volatility when trading activity increases.
 
According to the analyst, the trend points to a potential shock to Bitcoin’s supply, especially as the network nears a maximum of 21 million coins and only 1 million coins need to be mined.
With Bitcoin rising above the key support zone at $70,600, the drop in supply on exchanges is putting the focus on import demand. If the buying pressure continues while stocks are shrinking, prices could rise at a faster rate.
The endless demands of the institute
Notably, US Bitcoin ETFs saw net inflows on Monday, ending a two-day losing streak as Bitcoin rebounded and investor appetite for the world’s largest crypto rekindled.
About a dozen Bitcoin ETFs posted $167 million in inflows on Monday, after nearly $577 million in outflows on Thursday and Friday, and a SoSoValue surge.
Meanwhile, BTC prices rallied after US President Donald Trump said the war in Iran would end “very soon,” calming geopolitical fears and increasing risk appetite, sending oil prices sharply lower and crypto markets higher.
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