Bitcoin Supply Tightens: Traders Watch for Holiday Season Upside

Bitcoin supply on exchanges falls to historic lows, signaling potential for limited sell pressure.

Long-term holders continue accumulating, supporting bullish momentum and reducing liquid market supply.

Analysts see a holiday season rally possible if current support and accumulation trends hold.

Bitcoin — BTC, was trading near $90,000 with a small 2% drop over 24 hours, raising questions about short-term direction. Despite the minor pullback, analysts note signs of a supply squeeze forming. Historically, these setups have triggered large rallies in Bitcoin. Exchange reserves are falling, and long-term holders continue to accumulate. Traders are watching closely to see if the market can capitalize on tighter supply heading into the holiday season.

Exchange Balances Hit Historic Lows

On-chain data shows Bitcoin entering one of the lowest liquid supply phases in history. Centralized exchanges now hold roughly 2.76 million BTC, down from higher levels earlier this year. This decline accelerated in November and December while Bitcoin’s price drifted lower. Normally, falling prices push more BTC onto exchanges as traders prepare to sell, but this year has been different.

Long-term holders and institutions are withdrawing coins into custody. These moves reduce the supply available for immediate sale. Santiment reports that around 403,200 BTC left exchanges over the past year. That represents a 2.09% drop in circulating supply held on trading platforms. Fewer coins on exchanges lower the risk of large, sudden sell-offs. As Bitcoin hovers near $90,000, the ongoing supply decline signals strong underlying demand.

One year ago, exchanges held about 1.8 million BTC. Today, the figure sits closer to 1.2 million. Analysts suggest this trend could continue, creating a full supply shock if accumulation remains steady. The reduction in liquid supply has caught the attention of traders looking for potential upside during the holiday period.

Analysts Eye Potential Holiday Breakout

Market experts note Bitcoin continues to follow a bullish structure despite recent weakness. Analyst Michael van de Poppe highlighted that if buyers hold current ranges, Bitcoin could push toward $100,000 before Christmas. This target depends on traders maintaining support and preventing deeper corrections. Bitcoin Vector points out that macro liquidity conditions may be shifting in Bitcoin’s favor.

Previous setups with similar characteristics often led to strong price rallies. The combination of low exchange reserves and steady accumulation by long-term holders strengthens the case for upside. Traders are monitoring price action closely, looking for confirmations that could trigger a holiday season breakout. Tighter supply tends to amplify price moves, especially when combined with growing demand.

Analysts highlight that reduced BTC on exchanges could limit rapid sell-offs. That creates favorable conditions for bulls during seasonal momentum. Traders may find opportunities if the current trend holds through December. Bitcoin’s short-term pullback does not necessarily indicate weakness. Exchange reserves, accumulation patterns, and bullish structures provide a framework for potential gains.