According to Sygnum Bank, institutional demand and new reserve tactics have tightened the market, causing a 30% decline in the liquid supply of bitcoin in just 18 months.
The circulating supply of bitcoin is rapidly decreasing, paving the way for future price spikes as demand keeps rising, according to Sygnum Bank's June 2025 Monthly Investment Outlook.
Analysts at Sygnum observed that institutional adoption and the growth of Bitcoin purchase vehicles were the main causes of the 30% decline in the liquid supply of Bitcoin over the previous 18 months.
These organizations, which are usually seen as bullish, have been withdrawing coins from exchanges steadily. These organizations include corporate buyers and exchange-traded funds (ETFs).
"Demand shocks and upside volatility are being created by Bitcoin's rapidly declining liquid supply," the research stated.
Bitcoin balances on exchanges have decreased by almost one million BTC since the end of 2023. As more funds issue loans or equity to buy Bitcoin, the trend is picking up speed and further depleting the supply.
At the same time, investors are drawn to cryptocurrency markets by geopolitical and budgetary risks, especially those related to the US dollar's decline and the country's growing debt.
Bitcoin reserves are authorized by three US states.
Three US states recently passed laws allowing Bitcoin reserves, which added to the momentum. Texas is probably going to follow New Hampshire, which has already signed such a bill into law.
International attention is increasing in the meantime. Sygnum pointed out that plans to investigate Bitcoin reserve techniques have been declared by the Pakistani government and Reform UK, the party now dominating the UK election polls.
Official purchases of Bitcoin reserves have not yet taken place, but Sygnum stated that when they do, they may be a significant driver of price increases "both because of the demand it produces and because of the signaling effect."
It's not just institutional purchasing that's involved. Recent market conditions are strengthening Bitcoin's reputation as a safe-haven asset. According to the survey, demand for Bitcoin and gold in May was boosted by the sell-off in US Treasuries amid worsening fiscal conditions.
Bitcoin is more volatile on the upside than on the downside.
Additionally, Sygnum noted that Bitcoin's volatility profile was improving. Upward volatility has surpassed downward volatility over the last three years, indicating market maturity and increasing institutional participation.
"Over the past three years (since June 2022), upside volatility has consistently exceeded downside volatility, even though throughout Bitcoin's entire history, downside shocks have frequently been greater than upside shocks," the paper stated.
Additionally, Sygnum noted that Ether is picking up steam following years of poor performance. Strong revenue growth and increased interest from large financial institutions developing tokenization platforms on Ethereum and its layer-2 networks have been fueled by the latest Pectra update.
