No Bitcoin On Exchanges Left? Analysts Weigh In

By Aaron Feuerstein March 05, 2024 In Bitcoin, Cryptocurrency, ETFs
  • CryptoQuant analysis highlights that fears of OTC desks running out of Bitcoin are unfounded.
  • Misinterpretations surrounding OTC desk balances have been clarified by assertion that the observed decrease does not signify a shortage of Bitcoin for trade.
  • It rather reflects the volume of Bitcoin being actively traded and accumulated.

In the crypto world, the ebb and flow of Bitcoin availability on exchanges and over-the-counter (OTC) desks is a topic of hot debate and speculation.

Especially recently, with the approval of Spot Bitcoin ETFs which has seen daily volumes reach billions of dollars. The Bitcoin price has rallied recently on the back of the demand for BTC in ETFs which has caused many to call it a Bitcoin shortage.

Related: Blackrock And Fidelity Accumulate Over 200,000 Bitcoin Amid Record Inflows

Two prominent figures in the crypto analytics space, Ki Young Ju, founder and CEO of CryptoQuant, and a co-author at CryptoQuant, Mignolet, have recently voiced their insights on the matter, presenting views that shed light on this complex issue.


OTC Running Out Of Bitcoin Nonsense?

Ki Young Ju argued that OTCs are not running out of Bitcoin. He believes the notion that an OTC desk could run out of Bitcoin seems far-fetched, primarily due to the opaque nature of how these desks operate and the complex web of transactions and addresses they use.

Tracking their addresses is challenging without public disclosure, but their proximity patterns to other entities’ addresses suggest they still have sufficient liquidity. Coinbase Prime processed $7 billion last Friday.

Ki Young Ju

Unlike traditional exchanges, where holdings and transactions are more visible and easier to track, OTC desks do not typically disclose their wallet addresses. This lack of transparency makes it difficult to accurately assess their Bitcoin reserves.

However, by analysing the transaction patterns and the proximity of these undisclosed addresses to known entities’ addresses, it’s possible to infer that OTC desks maintain a significant level of liquidity. This inference is supported by observing the activities of major players in the crypto market.

Coinbase Prime Inflows, source: Ki Young Ju/ CryptoQuant

The volume of Coinbase Prime stresses the high level of liquidity available through such platforms—it also suggests that OTC desks, which cater to a similar clientele, are likely to have access to substantial Bitcoin reserves.

Misconception On Meaning Of OTC Balance

In a response to another user on X, who claimed the OTC desk was almost empty, fellow CryptoQuant analyst, Mignolet, chimed in.

According to Mignolet, there’s a common misunderstanding about what “OTC desk balance” represents. Many seem to interpret this balance as the amount of Bitcoin that can be traded on the OTC market, leading to the assumption that a decreasing balance indicates a depletion of Bitcoin available for OTC transactions.

Related: Banks Want Access to Bitcoin, Amid Decreasing BTC Supply

The analyst suggests the data should not be understood as the quantity of Bitcoin available for trading but rather as the amount of Bitcoin that is being traded and accumulated within the OTC market. This distinction suggests that the data likely reflects the accumulated Bitcoin in institutional wallets, which have been labelled and tracked over time.

The current data is not ‘the amount of Bitcoin that can be exchanged in the OTC market,’ but rather ‘the amount of Bitcoin traded and accumulated in the OTC market.


Aaron Feuerstein

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

You may also like