FameEX Hot Topics | Bitcoin Price Set for Volatility as Spot Supply Dries Up

Bitcoin’s price has continued to climb steadily, even as trading volumes have dropped to their lowest point since the beginning of the 2023–2026 market cycle. Retail investor activity has remained relatively subdued, and funding rates in perpetual futures contracts have recently dipped into negative territory. This creates an unusual backdrop for a market pushing toward new all-time highs, raising questions about what’s really driving the rally.

On-chain data offers an explanation: a stealth accumulation phase appears to be underway. While surface-level indicators suggest calm, the supply side of the market is quietly tightening. Bitcoin futures open interest remains close to record highs, signaling that leverage is building. This combination of decreasing supply and rising open interest suggests the market is coiled tightly, potentially primed for sharp volatility in either direction.

In the United States, demand for Bitcoin continues to grow, yet centralized crypto exchanges are holding fewer coins. Since January 2025, the total balance of BTC on exchanges has dropped by 14%, now totaling just 2.5 million coins—a level last seen in August 2022. This persistent outflow typically signals growing investor confidence and a shift toward long-term holding strategies.

Much of this BTC is being transferred to cold storage or custodial wallets, which effectively reduces the liquid supply available for trading. Large buyers, including institutions, often withdraw their BTC after purchase, reinforcing the theory of accumulation. With fewer coins readily available for sale, short-term selling pressure diminishes, leaving the market more vulnerable to sharp upward moves if demand accelerates.

Over-the-counter (OTC) desks, which facilitate large trades off-exchange, are also feeling the pinch. Although these desks typically match buyers and sellers, they still need reserves to execute transactions quickly. Those reserves have hit historic lows. CryptoQuant data shows that OTC addresses linked to mining activity have seen a 19% drop in balances since January and now hold just 134,252 BTC. These figures exclude miners and centralized exchanges, highlighting the broader supply crunch.

When both exchange and OTC liquidity dry up, the float of available Bitcoin shrinks dramatically. In this tight-supply environment, even moderate demand can drive prices higher, particularly when the market is skewed toward short positioning. The presence of negative funding rates alongside rising prices underscores this dynamic: despite bearish pressure in derivatives markets, spot demand is quietly overpowering it. If leveraged positions unwind, the result could be a sharp and sudden surge in Bitcoin’s price.

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