🔹 Bitcoin exchange balances hit the lowest level since 2017
🔹 Spot demand is on the rise
🔹 Market may be gearing up for a major supply squeeze
Liquidity Dries Up – and Tension Builds
The amount of Bitcoin readily available on exchanges is rapidly shrinking. It has now fallen to a 7-year low, raising a critical question: Is the market on the verge of a sharp price breakout?
Despite recent price fluctuations, investor sentiment around Bitcoin remains strongly bullish – and the market may finally be aligning with that optimism.
Recently, strategic bulls triggered short liquidations worth over $40 million near the $104,000 mark. This move pushed BTC back above $107,000, marking an intraday gain of 1.17%.
Bitcoin Is Leaving Exchanges – Fast
In June alone, the amount of BTC held on exchanges dropped from 3.09 million to 2.8 million – a 9.4% decrease in just one month. Currently, only 14% of all BTC in circulation is held on exchanges – the lowest share since 2017.
Historically, such steep declines in exchange balances often precede price spikes, especially when paired with steady or rising demand. In simple terms: when supply is limited and demand is increasing, prices tend to explode.
86% of BTC Is Now Off Exchanges – Is a Squeeze Coming?
If demand continues to climb while most coins are being held off exchanges, the market could undergo a revaluation to the upside. This scenario is known as a supply squeeze – a setup where too many buyers chase too few sellers, resulting in sharp price surges.
The current period of low volatility may simply be the calm before the storm – a pause before a major directional move.
Spot Demand Holds the Key
Before calling the current setup a guaranteed bullish signal, it’s critical to understand where the liquidity is flowing. Historically, a rising spot-to-derivatives volume ratio indicates growing organic demand. If derivatives dominate, however, markets become more vulnerable to manipulation and false breakouts.
At present, that ratio is rising again. According to CryptoQuant data, the spot-to-derivatives volume ratio just hit a monthly high after bottoming out at 0.05 in late May – the lowest level in seven months.
Notably, during that period of low spot participation, Bitcoin reached its all-time high, highlighting that the rally was driven primarily by derivatives, not real buying.
A Shift Toward Organic Buying?
Once BTC crossed the $111,000 psychological threshold, it triggered a wave of long liquidations. Overleveraged positions were flushed out, dragging the price back below $100,000 with little resistance.
Now, however, the dynamics might be shifting. Spot trading volume is picking up while exchange balances are drying up. This may signal a transition from speculative behavior to genuine demand constrained by limited supply.
If this divergence continues, Bitcoin could be on the verge of a textbook supply squeeze – potentially setting the stage for a powerful new rally.
Summary: The Clock Is Ticking as Supply Runs Dry
With 86% of BTC held off exchanges, rising spot interest, and a structural decline in available supply, the market setup is becoming increasingly explosive. While no one knows the exact timing, if demand persists, a breakout may become inevitable.
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