Bitcoin and Ethereum exchange supplies have fallen to multi-year lows, signaling long-term holder conviction despite recent market volatility. Data from Santiment indicates Bitcoin's exchange supply has dropped to its lowest level since 2017, while Ethereum's balance is near its lowest point since 2015. This trend suggests fewer coins are available for sale on centralized exchanges, reducing the risk of large-scale selloffs. Investors moving assets into self-custody typically reflects a long-term holding strategy rather than an intent to trade.

While exchange supplies are tightening, demand dynamics show a mixed picture. CryptoQuant data reveals Bitcoin demand has staged one of its strongest recoveries this year, with the 30-day cumulative demand metric improving from nearly -500,000 BTC to roughly -75,000 BTC. However, this rebound is primarily driven by derivatives markets, where futures demand shifted from around -295,000 BTC to slightly positive territory. Spot demand remains weak at approximately -78,000 BTC, indicating long-term buyers have not yet returned in force.

Ethereum displays a similar divide in investor sentiment. During a recent panic selloff, nearly 100,000 unique addresses deposited ETH to Binance as prices tested the $1,500 level. Simultaneously, withdrawals increased, suggesting some investors capitulated while others accumulated the dip. Polymarket data reflects this uncertainty, with traders assigning a 75% probability that ETH reaches $2,000 during 2026 and a 68% chance of another decline to $1,500 before then. The probability of Ethereum revisiting $1,500 has risen sharply, while expectations for a deeper drop toward $1,250 have eased, highlighting the $1,500 region as a key battleground between buyers and sellers.

Key Metrics

At the time of writing, Bitcoin is trading around $62,700, while Ethereum is near $1,740.

Bitcoin is transitioning away from its reliance on Strategy as institutional investors emerge as the next major source of demand, according to Bitwise executives. This shift in market dynamics suggests that the cryptocurrency is finding support from broader financial entities rather than a single corporate buyer.

In an interview with Milk Road on July 8, Bitwise Chief Investment Officer Matt Hougan said Strategy was the dominant Bitcoin buyer over the past several years, but that role is fading. "It will still be important, but it’s no longer the primary source of marginal capital," Hougan said.

Hougan pointed to Bitcoin's muted reaction after Strategy sold a little over $200 million worth of BTC to fund preferred dividends. Bitcoin "shrugged it off," he said, arguing that the market viewed the sale as evidence that Strategy is acting rationally rather than moving toward a forced liquidation scenario. Following the offloading, Bitcoin climbed back to the $64,000 mark, reclaiming the level for the first time in nearly two weeks.

Institutional Adoption Trends

Bitwise Head of Research Ryan Rasmussen said clients continue to ask whether Strategy represents a concentration risk, but most agree it is no longer a major long-term concern for Bitcoin. Hougan described Bitcoin’s history as a sequence of major buyers handing the baton to the next, from cypherpunks to Asian retail investors, U.S. retail investors, GBTC, Strategy and now institutional capital.

"The next marginal buyer is the end boss of investing," Hougan said. "It’s institutional capital."

Rasmussen cited Vanguard’s search for a head of digital assets as another sign that traditional finance is moving deeper into crypto. He said institutional adoption is becoming a "tidal wave," with asset managers, advisers, pensions and endowments increasingly forced to consider crypto exposure as clients and peers move into the asset class.

Market Sentiment and Sector Performance

Hougan added that career risk on Wall Street has flipped. Earlier, professionals risked reputational damage by supporting crypto. Now, he said, ignoring digital assets may be the larger risk.

Bitwise also highlighted the recent strength in decentralized finance assets as the firm’s DeFi index is up 51% over the past three months despite broader crypto market weakness. Rasmussen said stablecoin growth could benefit layer-1 blockchains such as Ethereum, Solana and Hyperliquid, along with infrastructure providers such as Chainlink and issuers such as Circle and Coinbase.