The supply dynamics of Bitcoin are rapidly changing. Institutions have purchased a large amount of Bitcoin through new investment tools, resulting in a sharp decrease in the number of circulating Bitcoin. At the same time, the long dormant Whale Wallet suddenly became active, transferring billions of dollars worth of Bitcoin for the first time in over a decade, a move that has historically caused market panic. This article will analyze the current situation of Bitcoin supply, explain why these “supply crisis” signals are crucial for market sentiment and volatility, and explore how to protect your investment portfolio.
Institutions are crazily hoarding Bitcoin, leading to a sharp decline in the supply of trading platforms
As institutions deposit Bitcoin into cold storage, only about 11% of Bitcoin remains available for trading on trading platforms. The decrease in circulating Bitcoin means a tight supply – as shown in the above picture, Bitcoin is securely locked in a box. This scarcity may drive up prices, but it also makes the market more sensitive to large sell orders.
A new wave of institutional adoption is rapidly absorbing the supply of Bitcoin and locking it out of the public market. Over the past year, spot Bitcoin ETFs and funds have opened the floodgates for pension funds, hedge funds, and businesses to heavily purchase Bitcoin. For example, BlackRock’s iShares Bitcoin Trust (IBIT) had a daily inflow of approximately $430 million by the end of May 2025, with a total monthly inflow of $6.35 billion, setting a new historical high. Every Bitcoin purchased by these institutions through such tools is withdrawn from the trading platform and deposited into custodial cold storage, further tightening the supply of tradable liquidity. Other institutional products such as Fidelity’s Bitcoin Fund (FBTC) are also hoarding Bitcoin in large quantities, exacerbating supply shortages.
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What was the result? The Bitcoin reserves of the trading platform have significantly decreased. On chain data shows that as of early June 2025, the proportion of Bitcoin held by trading platforms has dropped to below 11% of the total supply, a low not seen since 2018. By comparison, in 2020, trading platforms held over 17% of the Bitcoin supply, which is now almost halved. The decrease in available Bitcoin means that a large amount of Bitcoin is locked up by long-term holders and institutional custodians, leaving only 10-11% of the floating amount available for trading. This scarcity is a double-edged sword: with a decrease in circulating Bitcoin, buying pressure may quickly push up prices; But conversely, any sudden sell orders can also have a significant impact on prices due to insufficient liquidity. In short, the scarcity of Bitcoin is more evident than ever before, with “strong hands” hoarding Bitcoin and the public supply increasingly depleted.
The dormant whale awakens: billions of bitcoins begin to flow
The dormant Bitcoin whale may suddenly stir up waves – as shown in the above picture, the whale appears and disappears behind Bitcoin, symbolizing how big players influence the market. When inactive wallets transfer large amounts of funds (usually worth billions), it can trigger market concerns about selling. Even if these funds are not immediately sold, this trend will inject fear and volatility into the market.
While institutions lock in supply, the ancient Bitcoin whale suddenly becomes active. In the past few weeks, several wallets from the “Satoshi era” (2010-2011) have suddenly revived after a decade of silence. For example, on July 4, 2025, two Whale wallets from April 2011- which had not been active since Bitcoin prices fell below $1- suddenly transferred a total of 20000 bitcoins (worth over $2 billion) to a new address. Chain analysts also noticed that a single whale entity controlling multiple 2011 addresses transferred tens of thousands of bitcoins in one day, shocking the market. These bitcoins have grown in value by over 13 million% since 2011, making them long-term holdings worth billions of dollars.
Why is this important? Because when ancient whale funds flow, cryptocurrency traders will pay close attention. This type of massive transfer by long-term holders is extremely rare in history, often associated with market turning points or surges in volatility. In past market cycles, the reactivation of dormant Bitcoin wallets, especially such a massive whale, often heralded potential sell offs or market turbulence. The logic is that if a whale that has been holding for more than 10 years suddenly decides to move funds, they may be preparing to sell some of their assets to cash in huge profits. Even if these bitcoins are not directly sent to the trading platform (in recent cases, Whale transferred bitcoins to a new personal wallet instead of immediately going to the trading platform), the psychological impact is enough to make traders uneasy. This injects uncertainty into the market: why now? Will these bitcoins be thrown into the market?
We have recently seen this manifestation of fear. When news of wallet transfers came out 14 years ago, the price of Bitcoin fell nearly 2% in one day. Market participants are nervous about the scale of the transfer, and there are even rumors linking this activity to Bitcoin founder Satoshi Nakamoto (although unfounded, indicating market anxiety). The price of Bitcoin fell below $108000, indicating that the market is extremely sensitive to any hints of large investors selling. In short, the movements of giant whales will cause waves: they remind everyone that a large amount of Bitcoin may flood the market, and this possibility alone is enough to trigger volatility.
Market sentiment changes and volatility risks
These intertwined dynamics – supply shortages and whale awakenings – create an uncertain environment. On the one hand, the supply crisis brings bullish sentiment: with so little available Bitcoin, any surge in demand could trigger a sharp rise in prices (a typical “supply shock” scenario). Big buyers seem to be confident and have been hoarding Bitcoin for a long time, even though the supply of circulation continues to shrink. Strong hands are accumulating, which is usually a positive signal.
On the other hand, the market is also aware of the risks associated with concentrated holdings. When a few large holders hold a large amount of Bitcoin, their behavior (even rumors about their behavior) can trigger severe market volatility. We see ‘whales’ holding thousands of bitcoins – some of which start cashing in profits years later. Even small sell orders from these giant whales can have a huge impact in low circulation situations. The recent 2011 whale movement reminds us that if whales sell, Bitcoin’s liquidity may be insufficient and the price may fluctuate rapidly. The delicate balance between the scarcity of bullish sentiment and the fear of whale selling has made the current market particularly volatile.
For traders and investors, the conclusion is obvious: be prepared to deal with volatility. Bitcoin is still pushing for new highs (driven by stock market optimism and institutional adoption), but these internal supply dynamics may lead to severe price fluctuations in both directions. How to deal with this uncertainty? The answer is: Take protective measures, such as diversifying investments, setting stop loss orders, or exploring financial instruments to hedge risks, to ensure that your investment portfolio remains robust in market turbulence.
Control your encryption strategy
As the Bitcoin supply crisis intensifies and the volatility risk caused by whales approaches, now is the time to proactively manage risks. Don’t let your investment portfolio be caught off guard by the next whale movement or sudden market volatility. Through cautious strategies and risk management, you can seek opportunities or protect returns from uncertainty while limiting downside risks. Take action to protect your investment portfolio and prepare for future market fluctuations.
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BNB Smart Chain(BEP20)Address:0xb01e8aa1b334a49b224e4ba9f84eec1e58bd5087
Tron（TRC20）Address:TS2SWtDXFmCnCV1EdFMN3A4JQ5uYWzsqTk
Ethereum(ERC20)Address:0xb01e8aa1b334a49b224e4ba9f84eec1e58bd5087