- Declining OTC reserves could push institutional buyers to exchanges, triggering potential Bitcoin price surges.
- Institutional demand and low OTC supply may lead to a FOMO rally, increasing Bitcoin’s market value.
Despite large purchases from institutional investors and whales, Bitcoin’s price has remained relatively stagnant at around $100,000. The reason for this is the dynamics of Over-The-Counter (OTC) markets. OTC desks enable large-scale buyers to purchase Bitcoin without impacting public exchange prices.
A Bitcoin supply shock could be brewing
Why is Bitcoin still hovering around $100K while institutions and big players are stacking BTC? The answer lies in Over-The-Counter (OTC) markets.
OTC desks allow whales and institutions to buy BTC without impacting exchange order… pic.twitter.com/hRqgmfNVpA
— raphael @ relai.app (@raphschoen) February 11, 2025
However, with OTC desk balances steadily declining, a possible supply shortage may be on the horizon. Once these OTC reserves are depleted, large buyers may have no choice but to turn to exchanges, leading to possible price surges. OTC markets have historically allowed institutional investors, including corporate buyers and market makers, to acquire Bitcoin without increasing the price.
However, the supply of Bitcoin on OTC desks is decreasing. As of early 2025, the total balance available for over-the-counter trades was 140,000 BTC, which could quickly be exhausted. This declining supply of Bitcoin presents a situation where big players will likely need to buy directly from exchanges once these reserves are gone, which could result in upward pressure on Bitcoin’s price.
Source: X
A major factor contributing to the depletion of OTC reserves is the growing demand from institutional investors, including well-known entities like MicroStrategy, as reported by CNF. These large buyers often purchase Bitcoin in bulk via OTC transactions, keeping their activities hidden from public view. These buyers’ regular acquisition strategies could accelerate the current low supply, which could affect Bitcoin’s price if they are forced to buy directly from exchanges.
Analysts have pointed out that once the supply on OTC desks runs out, it could trigger either a market crash or a FOMO (fear of missing out) rally. A market crash scenario could result in Bitcoin prices dipping temporarily as large investors liquidate their positions, but the more likely outcome could be a FOMO-driven surge in Bitcoin’s value as buyers rush to secure their holdings before prices rise even further.
There’s ONLY 140,000 BTC left on OTC markets. If microstrategy makes three more purchases, ALL OTC BTC is depleted. If the ETFs accumulate as much as they did in January, OTC BTC is depleted. If the U.S. and 15 states begin to buy bitcoin… you get the idea. There’s almost no… pic.twitter.com/t3XQkyOSmW
— The Modern Investor (@ModernInvest) February 9, 2025
OTC Desk Demand Slows, but Spot Markets Stabilize
According to a CNF report, over the past few years, OTC demand has been high, especially during the bull markets of 2021. However, the 2024 bull cycle has seen smaller OTC inflows, quickly adopted by large buyers. This has resulted in OTC reserves reaching all-time lows.
Source: BGeometrics
In contrast, spot market activity has slowed down. Although Bitcoin’s price remains stable, demand for the coin is still present, as evidenced by the continued buying from whales and corporate investors.
Derivative Markets Remain Active
While spot market buying has slowed compared to 2023, derivative markets continue to lead Bitcoin trading. Open interest in Bitcoin derivatives has remained stable at $28 billion, showing that speculative trading still plays a role in the market.
However, as institutional investors acquire more Bitcoin directly, the derivative market could see a shift in focus, potentially amplifying price movements. A tightening supply of Bitcoin on OTC desks and subsequent buying pressure in the open market could send the price upward, reflecting the broader market’s demand for the cryptocurrency.
