Bitcoin surged to a fresh all-time high above $125,700 over the weekend as centralized exchanges (CEXs) recorded their lowest Bitcoin balances in six years — a sign that long-term holders are tightening their grip on supply.

According to TradingView data, Bitcoin briefly touched $125,720 on Coinbase early Sunday, surpassing its previous record of $124,500 set in mid-August. The milestone comes after a sharp September correction that saw BTC drop by 13.5%, before rebounding strongly as the market entered the historically bullish “Uptober” period.

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“Bitcoin hits new all-time high … and most people still don’t even know what Bitcoin is,” commented Nate Geraci, president of ETF Store. Analyst Rekt Capital added that “a convincing break above $126,500 could trigger a sharp acceleration in price discovery,” hinting at the potential for further gains if bullish momentum continues.

Bitcoin leaves exchanges at record pace

Blockchain analytics firm Glassnode reported that Bitcoin balances on centralized exchanges fell to just 2.83 million BTC on Oct. 5 — the lowest level since June 2019, when BTC traded around $8,000.

CryptoQuant data paints an even starker picture, showing reserves at 2.45 million BTC, marking a seven-year low. Over the past two weeks alone, 114,000 BTC, worth roughly $14 billion, have flowed out of exchanges — a sign that investors are increasingly moving coins into cold storage or long-term custody.

Analysts interpret these outflows as a bullish signal. Coins held on exchanges are considered part of the “available supply,” ready to be sold at any time. When Bitcoin is withdrawn to self-custody or institutional treasuries, it typically reflects confidence in long-term price appreciation and reduces immediate selling pressure.

Institutions brace for a potential liquidity crunch

The sharp reduction in exchange supply has even sparked talk of a potential liquidity squeeze. VanEck’s head of digital assets research, Matthew Sigel, wrote on X (formerly Twitter):

“Hearing exchanges are out of Bitcoin. Monday 9:30 am might be the first official shortage. Not financial advice… just: it might make sense to get some.”

Echoing this sentiment, investor Mike Alfred shared that his conversation with a leading over-the-counter (OTC) trading desk revealed an imminent shortage of sell-side liquidity.

“They will be completely out of Bitcoin to sell within two hours of futures opening tomorrow unless the price jumps to between $126,000 and $129,000,” Alfred said. “Things are getting wild.”

The tightening supply narrative, combined with ETF inflows and corporate treasuries adding exposure, is fueling speculation that Bitcoin’s next leg higher could come swiftly — particularly if institutional demand accelerates.