A quiet, measurable reconstruction took place in the market during the Bitcoin climb to the new ATH, which amounted to over $111,000 in late May. Currently, more BTC is being held in offshore exchanges than US regulatory platforms, steadily leaking from KYC-compliant venues.
Data from Cryptoquant shows that the market embraced institutional inflows in 2025 without abandoning its historic preference for flexible custody and low-friction trading platforms.
At the heart of this reallocation is the replacement reserve ratio, comparing the amount of BTC held in different types of exchanges. As of June 11th, the reserve ratio for KYC and non-KYC exchanges had dropped to 1.33 from 1.46 at the end of December.
The 9.1% drawdown reflects a widespread trend in liquidity moving quietly from regulated venues despite the January spot Bitcoin ETF rollout and subsequent influx.
Comparing US-controlled exchange reserves with offshore venues shows the same pattern. For the first time in years, the offshore exchange holds more BTC than its US counterparts, with the US/offshore responsive ratio turning back to a negative on January 1st, dropping to -0.22 by mid-June.
This pace of decline has been stable across first-quarter Bitcoin rallies and second-quarter integration, with little evidence that last year’s groundbreaking approval of ETF or the abolition of SAB 121 has significantly overturned the trend.
The volume pattern enhances this shift. Daily spot trading volume on KYC-compliant platforms fell 18.6% between January and June, down from BTC worth $424,700 per day to $345,800. Non-KYC exchanges also experienced a slowdown, with average volume dropping by 15.3%, while the share of total spot activity rose from 12.8% to 14.5%. This subtle increase suggests increased tolerance (or preference) for transactions outside of traditional regulatory frameworks.
Differences between price and reserve activities raise important structural questions. The price rise in Bitcoin is not consistent with a new inflow of reserves to the US or KYC venues. In fact, the spare levels and price data are only weakly correlated. The KYC/non-KYC ratio shows a daily correlation with the tight price of Bitcoin, but the US/offshore ratio is clocked at +0.03. This lack of correlation means that these changes are not merely a response to market profits, but are part of a deeper reorganization of market behavior.
Offshore exchanges, particularly those based in jurisdictions with Laxer ID verification requirements, continue to appeal to both high-frequency market makers and retail users who are seeking more anonymity or more generous terms of transaction. The typical low rates and wider token access for these platforms also play a role. Particularly because of the revival of arbitrage and delta neutral strategies behind the expansion options market.
ETF flows were positive net annually, but not accompanied by a sustained accumulation of reserves on US exchanges. Instead, reserves are leveling or declining, indicating that many ETF-related purchases are routed directly through licensed participants who harness existing liquidity. It also shows that the purchase failed to create meaningful demand for spot acquisition on the exchange.
This refers to a paradox. The very infrastructure built to legalize and integrate Bitcoin into US financial markets could be accelerating the leak of custody and trading activities from US platforms. ETFs are easily exposed to prices, but separate exposure from the underlying coin movement that once helped lock its liquidity in the US.
The resilience of non-KYC and offshore activities can lead to major changes in the market. An increase in share of trading volumes outside of traditional compliance rails could complicate enforcement actions, distort volume-based metrics, and challenge assumptions about the centrality of the US platform in driving price discovery.
However, the data shows that the adoption of Bitcoin as a financial product has not altered its decentralized nature. Even amidst the institutional interest and record-breaking ETF streams, detention and mobility preferences drift towards the path of least resistance. While the US may continue to be a key entry point for Fiat Capital, Bitcoin’s trading reach continues to extend beyond boundaries and outwards beyond the reach of regulators.
Due to thin US reservations, Bitcoin liquidity will move to non-Kyc exchanges.