FameEX Hot Topics | Bitcoin Price Poised for Volatility as Spot Supply Eases

Bitcoin’s price has been steadily climbing, even as overall trading volumes have declined to the lowest levels observed since the start of the 2023–2026 market cycle. Retail investor participation remains weak, and funding rates for perpetual futures contracts have recently edged into negative territory. This presents a paradoxical scenario: a market approaching all-time highs, yet lacking the typical signs of bullish exuberance. The unusual combination of low volume and rising prices has raised questions about what is truly fueling this rally.

On-chain metrics provide a compelling answer—Bitcoin appears to be undergoing a stealth accumulation phase. Despite the outward calm, supply-side dynamics are tightening behind the scenes. Open interest in Bitcoin futures is near record highs, indicating growing leveraged positions. At the same time, the amount of BTC available on exchanges is falling, a sign that coins are being withdrawn and held rather than traded. This dynamic suggests the market is becoming increasingly fragile and primed for a potentially volatile move.

In particular, the U.S. market is showing sustained demand for Bitcoin. Since January 2025, balances on centralized exchanges have declined by another 14%, bringing the total to just 2.5 million BTC. This is the lowest level since August 2022. Such consistent outflows typically signal investor confidence and a preference for long-term custody. Coins are being moved to cold wallets or custodial accounts, removing them from the liquid supply available for immediate sale.

Institutional players and large holders often follow this strategy: buy BTC, then transfer it off exchanges for safekeeping. This further reduces the volume of BTC that can be easily sold, weakening short-term selling pressure. As the circulating supply dries up, even a moderate increase in demand could result in outsized price movements, especially in a market with substantial leverage.

The trend extends to over-the-counter (OTC) desks as well. These venues, which facilitate large trades off-exchange, also require BTC reserves to maintain execution speed and trust. According to CryptoQuant, OTC addresses linked to mining activity have seen balances drop 19% since January, now holding just 134,252 BTC. This figure excludes centralized exchanges and miners themselves, showing a broader liquidity crunch.

With both exchange and OTC liquidity shrinking, Bitcoin’s tradable float is tightening. In this low-supply environment, even modest demand can trigger large price swings—especially when short positions dominate. Negative funding rates amid rising prices hint that spot demand is absorbing bearish pressure. If leveraged trades begin to unwind, the resulting price breakout could be swift and explosive.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.