Bitcoin OTC Reserves Plummet 69.6% Amid Institutional Demand
2min read Bitcoin’s over-the-counter desks (OTC Desks) are experiencing a significant reduction in reserves, sparking concerns about an imminent supply squeeze in the market. Recent data indicates that OTC desk balances have plummeted from approximately 480,000 BTC in September 2021 to around 146,000 BTC as of early 2025. This dramatic decline is attributed to the increased institutional demand, as large players, including corporations and hedge funds, rely heavily on OTC desks for private transactions to avoid impacting market prices.
The dwindling OTC Bitcoin reserves is a direct result of substantial institutional purchases. For example, ETFs and major companies have absorbed over 750,000 BTC, further constricting the current supply. Experts caution that as OTC Bitcoin reserves continue to diminish, institutions may start buying directly from exchanges. This shift could lead to significant volatility and price fluctuations due to the larger orders being placed on exchanges.
Market dynamics have also shifted, with Bitcoin’s dominance in the cryptocurrency space increasing to 58.3%, reflecting heightened institutional interest. If these institutions turn to exchange-based transactions, it could send shockwaves across the Bitcoin market, potentially driving prices higher. Additionally, indicators suggest that Bitcoin is nearing miner capitulation, which may prompt miners to sell off their reserves, further impacting market dynamics and liquidity.
As the market adjusts to these developments, analysts have deduced that the ongoing supply squeeze could propel Bitcoin to new heights. While Bitcoin faces a temporary setback due to the recent crypto market crash, its global interest remains robust. The current situation is poised for a potential surge, with interested buyers scrambling for limited assets. The implications of the tightening supply also underscore the importance of monitoring OTC desk activities as a reliable indicator of price movements.
Bitcoin began trading at $87,100, experiencing some range-bound fluctuations between the $87,600 resistance and $86,820 support. An attempted upward breakout failed, leading to a significant trend reversal and a steep downtrend. The downtrend found support at another death cross at 4:00 AM UTC, with the RSI indicating high selling pressure as it ventured into the oversold region. By 7:45 UTC, Bitcoin was trading at $85,170 and soon entered a trading range. A golden cross was observed but failed to carry Bitcoin out of the range, as it faced strong resistance at the $85,500 mark.
Bitcoin’s failure to break resistance resulted in another downtrend, supported by a death cross at 13:00 UTC. Eventually, Bitcoin was seen at the $83,360 support. A golden cross appeared an hour later, and the BTC price commenced a slow ascent. However, Bitcoin soon faced rejection at $86,400, and the trend reversed. As of the last update, the coin was resting on the $83,360 support.
Considering that the market is still recovering from yesterday’s crash, Bitcoin’s recovery may take time. While a significant amount of interest is pouring in from various directions, the BTC price is expected to grow. For now, the resistance trendline seems to be falling, and a bearish triangle can be seen forming. It appears that Bitcoin will abandon current support levels and dip lower. Any positive market activity is likely to take place in the second half of the day. With OTC reserves running low, the coming months could be fascinating for the Bitcoin market.
