Bitcoin Supply Shock Occurs as Binance Reserves Hit Rock Bottom

Despite bullish scarcity signals, Binance’s Whale Ratio rose to 0.41, indicating that large investors may be preparing to sell.

The available supply of Bitcoin on the world’s largest cryptocurrency exchange is shrinking rapidly.

This increasing shortage, one of the most pronounced figures in months, comes as data suggests large-scale investors are accumulating the assets, paving the way for a potential supply contraction.

Conflicting signals from major holders

October data shared by Arab Chain shows that Binance’s Bitcoin Scarcity Index moved to the top The index made a sharp jump in late October and exceeded the value of 9. This index is a direct measure of the reduction in the Bitcoin supply available for immediate trading on the exchange.

Simply put, a rising index means that the amount of Bitcoin listed on Binance and available for purchase is gradually decreasing. The analytics platform clarified that this typically indicates an accumulation phase, where large investors and whales buy BTC and withdraw from Binance, effectively taking them out of the market.

“This is generally considered a positive long-term signal that supports the likelihood of continued upside potential in the medium term, despite short-term price fluctuations, as buyers appear to rush to acquire Bitcoin in the market,” Arab Chain said.

The assessment also found that such supply declines are often linked to positive news or sudden capital inflows. However, a critical comment was also made: scarcity alone cannot increase prices. For a large price increase to occur, this limited supply must be met with genuine new demand from an increasing number of buyers.

Yet this positive accumulation signal is not the only story. Another statistic tells a different story. The seven-day average of Binance’s Exchange Whale Ratio has done the same climbed steeply, increasing from about 0.33 on October 12 to about 0.41 between October 22 and 25.

This ratio measures large deposits in the stock market, and such a sustained increase has historically indicated that large holders are preparing to sell, creating a wall of supply that can slow or reverse a price increase. It creates a complex picture where one set of data suggests share ownership, while the other points to possible sales.

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Broader market trends

Moving coins through exchanges isn’t just about whales holding private wallets. A growing trend shows some large BTC holders moving their assets into spot Bitcoin ETFs like BlackRock’s.

These “in-kind” transfers allow whales to exchange their Bitcoin for ETF shares without creating a taxable event, a process that could act as an additional drain on the liquid supply available on crypto exchanges.

Meanwhile, BTC was trading at $110,232 at the time of writing, down from the $111,400 level it was trading at yesterday, when the US Federal Reserve announced its second consecutive interest rate cut. Although the stock is up 1.2% in seven days, the 30-day view shows a decline of 3.4% and remains more than 12% below the new all-time high above $126,000 reached in early October.