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Bitcoin sell-side liquidity hits lowest level since 2018 fueling BTC rally

Bitcoin sell-side liquidity hits lowest level since 2018 fueling BTC rally

Bitcoin fluctuated between $92,000 and $100,000 through late December before reclaiming $102,000 by Jan. 6. CryptoQuant data suggests that reduced sell-side liquidity, changes in over-the-counter (OTC) desk balances, and a renewed whale accumulation pattern might be factors shaping these fluctuations.

OTC Desk balances decline

Activity on OTC desks, tracked through total holdings and 30-day balance changes, reveals declining balances at the end of 2024 after rising from October to December. Net outflows from these desks have appeared alongside a rising price environment, prompting discussions that large entities could be withdrawing coins from OTC channels and holding them off-exchange.

Per CryptoQuant, the pink overlay in the OTC chart below reflects a negative 30-day change, indicating more BTC outflow than inflow, while the blue line measuring the overall OTC desk balance shows a steady decrease. Analysts watch this dynamic because it frequently coincides with institutional or high-volume buyers removing coins from immediate circulation, often moving into spot Bitcoin ETFs.

Whales accumulate Bitcoin

Further insights emerge from whale behavior. Addresses with 1,000 to 10,000 BTC displayed prolonged net selling from 2021 to 2023, yet 2024 data showed a shift toward neutral to slightly positive accumulation, highlighted in one-year change metrics.

These addresses had been distributing over a multi-year period, but more recent data points to a reversal. Until 2024, the pink line representing total whale holdings had plateaued at lower levels and then moved slightly higher, while the blue line measuring 1-year change began inching closer to zero. Since January 2024, both the whale balance and 1-year change have moved positive. This suggests that, at least in the aggregate, whales have reduced distribution and are possibly reacquiring coins after the halving and subsequent volatility.

Sell-side liquidity declines

The liquidity inventory ratio and total sell-side liquidity measures add further context. The CryptoQuant visualization below shows a downward trend in the overall liquid supply, suggesting fewer BTC reside in wallets known to engage in regular selling.

The liquidity ratio, often expressed in months, compares available BTC in liquid addresses to ongoing demand, and a falling ratio indicates that new demand could more quickly outstrip accessible supply. Meanwhile, the accumulator address demand metric shows incremental inflows to addresses…

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