Bitcoin’s circulating supply is tightening fast, setting the stage for potential price surges as demand continues to grow, according to Sygnum Bank’s June 2025 Monthly Investment Outlook.

Sygnum analysts noted that Bitcoin’s liquid supply had dropped by 30% over the past 18 months, primarily driven by institutional adoption and the rise of Bitcoin acquisition vehicles.

These entities, including exchange-traded funds (ETFs) and corporate buyers, have steadily withdrawn coins from exchanges, a move typically seen as bullish.

“Bitcoin’s fast-shrinking liquid supply is creating the conditions for demand shocks and upside volatility,” the report said.

Since late 2023, Bitcoin balances on exchanges have fallen by about 1 million BTC. The trend is accelerating as a growing number of funds issue equity or debt to purchase Bitcoin, further soaking up available supply.

At the same time, geopolitical and fiscal uncertainties, particularly around the weakening US dollar and ballooning US debt, drive investors toward crypto markets.

Three US states approve Bitcoin reserves

Adding to the momentum, three US states recently passed legislation permitting Bitcoin reserves. New Hampshire has already signed such a bill into law, with Texas likely to follow.

Meanwhile, international interest is growing. Sygnum highlighted that Pakistan’s government and Reform UK, the party currently leading in UK election polls, have announced intentions to explore Bitcoin reserve strategies.

Though official Bitcoin reserve purchases have yet to materialize, Sygnum said that when these begin, they could be a major catalyst for upward price movement, “both because of the demand it creates and because of the signaling effect.”

Institutional buying isn’t the only factor at play. Bitcoin’s image as a safe-haven asset is being reinforced by recent market dynamics. The report pointed to the sell-off in US Treasurys amid deteriorating fiscal conditions, buoying demand for Bitcoin and gold in May.

Bitcoin’s upside volatility outpaces downside

Sygnum also flagged Bitcoin’s improving volatility profile. Over the past three years, upside volatility has outpaced downside volatility, a sign of market maturation and growing institutional involvement.

“Although over the full history of Bitcoin, downside shocks have often been greater than upside shocks, over the past three years (since June 2022), upside volatility has consistently exceeded downside volatility,” the report said.

Sygnum also mentioned that Ether is regaining momentum after years of underperformance. Therecent Pectra upgrade has driven strong revenue growth and renewed interest from major financial institutions building tokenization platforms on Ethereum and its layer-2 networks.