Bitcoin Indicators Suggest a Breakout, but a Huge “Underwater” Supply Wall is Secretly Pinning Price Below $93,000

Bitcoin (BTC) is on track to end 2025 with over $112 billion locked in US spot ETFs, foreign exchange reserves at an all-time low of 2,751,000 BTC, and open interest in perpetual futures reaching nearly $30 billion.

Any of these data points would have sounded constructive in 2022. In the second half of 2025, it will map to the same results. So while the price falls between $81,000 and $93,000, the narrative remains bullish and volatility remains subdued.

The gap between what the numbers say and how the market trades defines structural stagnation. In this regime, liquidity exists but does not flow, capital is large but fragmented, and the plumbing cannot convert major demands into directional certainty.

On December 17th, it was revealed that Bitcoin had liquidated $120 million short and $200 million long within hours. This wasn’t because leverage exploded, but because the order book couldn’t absorb the round trip without a whipsaw.

Spot depth for Tier 1 centralized exchanges looks acceptable on paper. CoinGecko’s June 2025 report pegs the median order book depth for BTC at $20 million to $25 million on each side, within ±$100 of the median price across eight major venues.

Binance alone supplies about $8 million in buying and selling, accounting for 32% of the total. Bitget holds $4.6 million and OKX holds $3.7 million. Zooming in on the ±$10 band, Binance is the only one clearing $1 million on both sides.

Most of the other exchanges are between $100,000 and $500,000, while Kraken and Coinbase are closer to $100,000. If an investor cross-trades hundreds of coins, this would be institutional level depth.

But when a mid-sized fund decides to rebalance, or a macro event requires unwinding across multiple venues simultaneously, it’s a piece of paper.

Kaiko’s February 2025 liquidity ranking confirms the asymmetry. Market depth for Bitcoin, Ethereum, Solana, and XRP has returned to pre-FTX levels, but more than half of the top 50 tokens by market cap still fail to generate $200 million in average daily trading volume.

Non-major liquidity is rapidly decaying, and as trading activity increases relative to available depth, the price impact jumps non-linearly, Kaiko notes. The architecture has been restored. Capacity has not been expanded.

blood flow problems

Low exchange reserves clearly map to bullish supply dynamics. Fewer coins in the venue means less inventory available for sale.

This logic breaks down when coins stop moving between exchanges. CryptoQuant’s Inter-Exchange Flow Pulse (IFP) has weakened throughout 2025, indicating that arbitrageurs and market makers are less aggressive in moving Bitcoin between venues to exploit mispricing.

When IFP is low, the aggregate order book becomes thinner and prices become more sensitive to individual orders, even if they are small. When record-low reserves are combined with weak inter-exchange distribution, scarcity appears as a weakness rather than a mechanical strength.

Binance further complicates the situation. While most major exchanges have reported net outflows of BTC, Binance has recorded net inflows, concentrating tradable inventory in a single venue where price discovery takes place.

This centralization blunts the “low reserves = bullish” paradigm, as sellable supply is pooled precisely where liquidity is most important.

Large flows, whether ETF redemptions, macro-driven selling, or derivative unwinding, run into the same hurdles when depth elsewhere is shallow and concentrated on one platform.

Derivatives are reset without conviction

Perpetual futures open interest fell from a cycle high of around $50 billion to about $28 billion by mid-December, according to a recent report from Glassnode. This corresponds to an almost 50% reduction in the market’s ability to absorb directional bets.

During the recent sell-off, funding rates have not spiked in any case and have hovered around the 0.01% baseline, with Binance’s late October funding note showing BTC and major alt investors at near-neutral levels with minimal divergence.

The market is not paying a price for either longs or shorts because the positioning is de-risked rather than re-leveraged.

Option to place the layer within the second constraint. The same Glassnode report notes that Bitcoin is hitting a “hidden supply wall” between $93,000 and $120,000, with a short-term holder cost threshold of about $101,500, and about 6.7 million BTC, or 23.7% of the circulating supply, is being traded behind the scenes.

Approximately 360,000 BTC of the recent sell-off came from holders who realized losses. Supply with that loss migrates to the long-term holder cohort, which historically precedes either capitulation or a long-term chop in the range.

Dec. 26 marks the year’s largest options expiry, but heavy gamma positions will lock spot prices in the $81,000 to $93,000 range until those contracts expire. Derivatives are not increasing volatility; they are actually reducing it.

ETFs flow as noise, not signals.

The U.S. Bitcoin Spot ETF holds about 1.3 million BTC, or about 6.5% of its market capitalization, with cumulative net inflows reaching $57.5 billion as of Dec. 18, according to data from Farside Investors.

So while ETF channels are structurally important, they are directionally unreliable. The flow pattern in December was turbulent. There was a net outflow of $357.6 million on Dec. 15, another $277.2 million on Dec. 16, and a reversal on Dec. 17 to net inflows of $457.3 million led by Fidelity’s FBTC and BlackRock’s IBIT.

On Dec. 15, Bitcoin held near $87,000 despite ETFs outflowing more than $350 million in a single day, highlighting that while ETF flows are currently large enough to move intraday sentiment, they are not consistently additive to price.

This instrument trades macro expectations and interest rate policy and does not provide a stable “upward-only” impulse.

What will the stagnation look like in Q1 2026?

Structural stagnation is not a bearish call, it is simply a liquidity regime.

Spot books on top centralized exchanges have recovered to pre-FTX levels for Bitcoin. Still, most venues have mostly moderate liquidity in the low millions of dollars per team, overwhelmingly concentrated on Binance.

Intra-exchange reserves are at record lows, but flows between exchanges are collapsing, so a thin book will lead to a spike in slippage and a huge impact on the price of the same notional amount.

Open interest is permanently reset, funding remains neutral, and options and overhead spot supply between $93,000 and $120,000 mechanically lock Bitcoin into a range until new money or macro catalysts force a position change.

Flows in ETFs fluctuate by hundreds of millions of dollars every day, but the signs are reversed by interest rate data, employment data, and Fed guidance rather than by crypto-native fundamentals.

Unless one of the three things changes, Bitcoin may have bullish headlines, new products, and expanding infrastructure, but the price trend is likely to remain volatile and range-bound until the first half of 2026.

Liquidity exists, but it’s stalled. The infrastructure is institutional-grade, but not scaled to scale. The capital city is large but fragmented by venue, wrapper, and jurisdiction.

That is what structural stagnation means. It’s not broken, it’s not weak, it’s just fenced in by its own plumbing until something forces it to make the next move.