Bitcoin Supply Crashes to 7-Year Low – Brace for a Historic Price Explosion?

Bitcoin’s circulating supply just hit its tightest squeeze since 2018—and the crypto markets are buzzing. With fewer coins up for grabs, traders are betting big on a supply shock that could send prices into the stratosphere.

### The Great Bitcoin Squeeze

Exchanges are running dry as long-term holders refuse to sell. Institutional demand keeps climbing, but the available BTC keeps shrinking. Basic economics says when demand outstrips supply, prices skyrocket. Will this time be different? (Spoiler: Wall Street’s ‘experts’ will still get it wrong.)

### The Bullish Domino Effect

Every past supply crunch—like the 2020 halving—kicked off a parabolic rally. This time, with spot ETFs hoarding coins and retail FOMO creeping back in, the stage is set for a potential supercycle. Even the SEC can’t regulate scarcity.

### The Cynic’s Corner

Sure, banks will claim they ‘saw it coming’—right after they finish shorting it. Meanwhile, Bitcoin’s code doesn’t care about hedge fund narratives. The math is simple: less supply + more demand = price goes brrr. Buckle up.

Source: Glassnode

Historically, such structural declines in liquid supply often precede aggressive supply-side imbalances, especially when paired with steady or rising demand.

Put simply, if demand (reflected in declining exchange balances) continues to outpace available liquidity, while investors de-risk, deleverage, or rotate capital elsewhere, the cost basis per BTC could face sharp upward repricing.

That’s the mechanical setup for a classic supply squeeze. With 86% of BTC now held off-exchange, the current low-volatility range could be the coiling phase before a breakout.

However, according to AMBCrypto, for this potential rally to ignite, one key catalyst will be essential.

Tracking the source of Bitcoin’s price move

Before interpreting the current metrics as outright bullish, it’s essential to assess where liquidity is actually flowing. 

Historically, a rising spot-to-derivatives volume ratio signals growing organic demand. However, if derivatives markets begin absorbing that liquidity, it can trigger greater fakeouts.

At the time of writing, CryptoQuant’s Bitcoin Trading Volume Ratio (Spot vs. Derivatives) had flipped upwards, hitting a monthly high after bottoming at 0.05 in late May – Its lowest level in seven months. 

Notably, as the chart below shows, Bitcoin printed its ATH during that low-ratio environment, underscoring that the MOVE was heavily derivatives-driven with minimal spot participation.

Source: CryptoQuant

Consequently, once BTC breached the $111k psychological ceiling, it triggered a wave of liquidations. Over-leveraged longs were flushed out, dragging Bitcoin back below the $100k-level with little resistance.

Now, however, a key structural shift may be underway. 

Spot volume has been climbing, and with exchange-held supply at a 7-year low, the market might be be transitioning from speculation to supply-constrained demand.

If this divergence continues, Bitcoin could be on the verge of a classic supply squeeze, potentially setting the stage for a high-momentum breakout.