Bitcoin Liquidity Crisis Deepens as Institutions Accelerate Buying
Sygnum Bank warns of potential Bitcoin price breakout amid 30% drop in liquid supply.
Institutional Demand Soaks Up Bitcoin’s Available Supply
Bitcoin’s liquid supply has shrunk by 30% over the past 18 months, a development Sygnum Bank says could lead to a sharp upward price movement. According to the Swiss-based digital asset bank’s June 2025 Monthly Investment Outlook, institutional adoption and strategic Bitcoin accumulation are tightening the market faster than ever.
Since late 2023, exchange balances have dropped by roughly 1 million BTC, as a growing number of entities — including ETFs and corporate treasuries — withdraw coins for long-term holding. This shift reduces sell-side pressure, making the market more vulnerable to demand shocks.
“Bitcoin’s fast-shrinking liquid supply is creating the conditions for demand shocks and upside volatility,” Sygnum stated.
The buying isn’t just from funds and corporates. Increasingly, investors are positioning Bitcoin as a hedge against weakening fiat currencies, especially in light of the ballooning U.S. debt and geopolitical instability.
US States Embrace Bitcoin Reserves
New Hampshire has signed legislation allowing Bitcoin to be used as a reserve asset, while Texas is expected to follow. A third state has also approved similar measures. These moves are seen as early signals of government-level interest in crypto-backed financial resilience.
Meanwhile, momentum is picking up overseas. Both Pakistan’s government and Reform UK — the political party currently leading polls in the UK — have declared their intention to explore Bitcoin reserves. While no country has officially started buying, Sygnum believes these moves could spark a new wave of adoption.
“When official reserve purchases begin, they could be a major catalyst for upward price movement — both from increased demand and the signaling effect,” Sygnum noted.
Market Dynamics Favor Bitcoin Over Traditional Assets
With U.S. Treasury sell-offs accelerating due to rising fiscal concerns, demand has pivoted toward alternative assets. Gold and Bitcoin both saw increased inflows in May, bolstering Bitcoin’s status as a modern safe-haven.
Upside Volatility Surpasses Downside Risks
Sygnum’s report also pointed to a fundamental shift in Bitcoin’s volatility profile. Since June 2022, upside volatility has outpaced downside moves — a reversal from historical norms and an indication of a maturing market structure.
“Although over the full history of Bitcoin, downside shocks have often been greater than upside shocks, over the past three years… upside volatility has consistently exceeded downside volatility,” the report explained.
Ethereum Gathers Momentum Post-Pectra Upgrade
Beyond Bitcoin, Sygnum’s analysts observed a resurgence in Ethereum’s investment narrative. Following the Pectra upgrade, ETH is seeing renewed institutional interest, driven by growth in tokenization platforms and activity on layer-2 networks.
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