Despite its choppy price action, bullish conviction in Bitcoin (BTC) remains clear. Recent market moves may be starting to back it up. Strategically, bulls triggered a $40 million short liquidation near $104,984, pushing BTC back up to $107k with an intraday rally of 1.17%.
Key Developments:
- Bitcoin balances on exchanges dropped 9.4% in June (from 3.09M to 2.8M BTC).
- Exchange-held supply now represents just 14% of circulating BTC – the lowest level since 2017.
- 86% of BTC is held off-exchange, tightening liquid supply amid rising spot volume.
Historically, such structural declines in liquid supply precede aggressive supply-side imbalances. When paired with steady demand, this creates a mechanical setup for a classic supply squeeze.
Tracking the Source of Bitcoin’s Price Move
Before interpreting metrics as outright bullish, assess where liquidity flows:
Spot vs. Derivatives Volume:
- A rising spot-to-derivatives ratio signals organic demand.
- In May, the ratio bottomed at 0.05 (lowest in 7 months), coinciding with BTC’s ATH – a derivatives-driven move with minimal spot participation.
Current Shift:
- Spot volume is climbing while exchange supply dwindles.
- If this divergence continues, BTC could face a supply-constrained breakout.
👉 Why Bitcoin’s scarcity could trigger a historic rally
FAQ Section
Q: How does low exchange supply impact Bitcoin’s price?
A: Reduced liquidity amplifies price volatility when demand rises, potentially accelerating upward moves.
Q: What caused the recent BTC drop below $100k?
A: Over-leveraged longs were liquidated after BTC breached $111k, revealing weak spot market support.
Q: Is now a good time to accumulate BTC?
A: With supply at multi-year lows and spot demand rising, long-term holders may find this an opportune window.
Bottom Line:
The current low-volatility phase may be a coiled spring. If spot demand sustains, Bitcoin’s scarcity could fuel a high-momentum surge. Stay tuned to on-chain metrics for confirmation.