Bitcoin (BTC) Price: Perfect Storm Brewing as Exchange Supply Hits Record Lows

TLDR

Bitcoin exchange holdings dropped 14% in 2025 to 2.5 million BTC, the lowest since August 2022 OTC desk balances fell 19% since January to just 134,252 BTC as supply tightens Negative funding rates coincided with BTC’s rally to $110,000, a rare bullish pattern Technical analysis shows breakout above flag pattern with $137,000 price target Key support levels identified at $107,000 and $100,000 during potential pullbacks

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Bitcoin’s price movement continues to defy traditional market patterns as the cryptocurrency approaches record highs despite unusual underlying conditions. The digital asset recently touched $110,400 before pulling back to $108,800, staying within striking distance of its all-time high near $112,000 set in May.

Bitcoin (BTC) Price

The rally comes at a time when trading volumes have dropped to their lowest levels since the start of the current market cycle. Retail investor activity remains subdued across most platforms.

Exchange holdings have experienced a sharp decline throughout 2025. Since January, the amount of Bitcoin held on centralized exchanges has dropped 14% to just 2.5 million BTC. This represents the lowest level of exchange-held Bitcoin since August 2022.

Source: CryptoQuant

The decline in exchange balances typically indicates investors are moving coins into cold storage or custodial wallets. This behavior suggests long-term holding intentions and reduces the liquid supply available for immediate sale.

Supply Tightening Across Markets

Over-the-counter trading desks are also experiencing supply constraints. These platforms, which facilitate large off-exchange trades, maintain Bitcoin reserves to enable quick execution of transactions.

Current OTC reserves have reached historic lows according to CryptoQuant data. OTC addresses connected to mining operations have seen balances drop 19% since January. These addresses now hold just 134,252 BTC in total.

Source: CryptoQuant

The data excludes direct miner addresses and centralized exchange holdings. It focuses on addresses one step removed from mining pools, providing insight into OTC market liquidity.

When both exchange and OTC liquidity decrease simultaneously, the available trading supply shrinks. This dynamic can amplify price movements as demand competes for fewer available coins.

Negative Funding Rates Create Unusual Pattern

Funding rates in perpetual futures markets recently turned negative while Bitcoin’s price continued rising. This creates an unusual market dynamic that has historically preceded major price moves.

Source: CryptoQuant

Funding rates represent periodic payments between long and short position holders in futures contracts. Positive rates indicate bullish sentiment as long traders pay short traders. Negative rates suggest short trader dominance.

When negative funding coincides with rising spot prices, it indicates strong underlying demand. The spot market absorbs selling pressure from short positions while prices continue climbing.

This pattern has appeared three times during the current market cycle. Each instance was followed by substantial price increases. The most recent occurrence happened between June 6-8 as Bitcoin moved from $104,000 to $110,000.

Technical Analysis Points Higher

Chart analysis reveals Bitcoin broke out above a flag pattern formation earlier this week. Flag patterns typically indicate continuation of existing trends after brief consolidation periods.

Source: TradingView

The breakout provides a technical foundation for further price gains. The relative strength index shows bullish momentum while remaining below overbought territory.

Bitcoin’s 50-day moving average crossed above the 200-day moving average last month. This golden cross formation often signals sustained upward momentum in technical analysis.

Price projections based on the flag pattern breakout suggest a target around $137,000. This calculation uses the height of the preceding uptrend and projects it from the breakout point.

The first key resistance level sits at $112,000, near the previous all-time high. A break above this level could accelerate movement toward the projected target.

Support levels during any pullback are identified at $107,000 and $100,000. The $107,000 level corresponds to previous peaks from December and January. The $100,000 level represents both a psychological round number and a technical trendline dating back to November.

Current market conditions show Bitcoin futures open interest hovering near record highs while spot supply continues tightening across all major trading venues.

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