Bitcoin Supply Shrinks 30% — Will BTC Price See an Institutional-Driven Rally?

The available Bitcoin supply has fallen sharply, setting the stage for potential price surges as institutional demand builds, according to Sygnum Bank’s latest Monthly Investment Outlook for June 2025.

Key Takeaways:

• Bitcoin’s liquid supply has dropped 30% over the past 18 months, signaling tightening market conditions.
• Institutional demand is accelerating, with ETFs and corporate vehicles channeling new capital into BTC.
• US state Bitcoin reserves and growing global interest could trigger fresh demand and boost BTC prices.

Over the past 18 months, liquid Bitcoin supply has dropped by 30%, driven by rising institutional adoption and an increase in acquisition vehicles such as exchange-traded funds (ETFs), the report stated.

In total, one million BTC have moved off exchanges during this period — typically a bullish signal, as coins are often withdrawn for long-term holding.

“Bitcoin’s fast-shrinking liquid supply is creating the conditions for demand shocks and upside volatility,” Sygnum wrote.

Institutional demand is a key driver behind this trend. An expanding number of ETFs and corporate vehicles are funneling new capital into BTC.

These structures allow equity and fixed-income investors, many of whom could not directly hold crypto in the past, to gain exposure to Bitcoin.

At the same time, geopolitical and macroeconomic uncertainty is pushing more capital toward hard assets like Bitcoin.

Fiscal instability in the US, a weakening dollar, and the selloff in Treasurys have all contributed to an increasingly favorable backdrop for crypto markets, the report noted.

The emergence of Bitcoin reserves at the state and national level may provide another catalyst. Three US states have already passed Bitcoin reserve legislation, with New Hampshire signing its bill into law. Texas is also likely to follow, Sygnum said.

International interest is building as well. The Pakistani government and Reform UK, currently leading in the UK election polls, have both expressed interest in Bitcoin reserves.

BREAKING: SUPPLY SHOCK IS REAL — only ~146K #Bitcoin left in OTC markets. Major institutional buys will soon hit public exchanges. Buckle UP. pic.twitter.com/jVFaLu9Tg5

While no official BTC purchases have been made yet, such moves could spark significant price momentum once implemented, both by creating fresh demand and signaling institutional endorsement.

Meanwhile, Bitcoin’s volatility profile is also evolving. According to Sygnum, upside volatility has consistently outpaced downside volatility over the past three years, a shift that reflects maturing market dynamics and deeper liquidity.

Looking at the broader crypto sector, sentiment has improved sharply. The report pointed to a “strong Bitcoin demand trend” and rising onchain activity — particularly following Ethereum’s recent Pectra upgrade — as further signs of growing market strength.

Coinbase CEO Brian Armstrong has warned that Bitcoin could eventually replace the USD as the world’s reserve currency if lawmakers fail to address America’s spiraling debt.

“I love Bitcoin, but a strong America is also super important for the world,” Armstrong posted on X Tuesday. “We need to get our finances under control.”

The U.S. national debt recently crossed $37 trillion, adding fresh urgency to concerns about long-term fiscal stability.

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