Bitcoin (BTC) is inching closer to a historic breakout as market dynamics signal an impending supply shock, potentially setting the stage for a fresh all-time high. With BTC currently trading around $104,000, the top cryptocurrency needs just a 4% gain to surpass its previous peak of $109,300.
Supply Shrinks as Demand Grows
A key driver behind Bitcoin’s bullish outlook is the rapid decline in available supply across centralized exchanges and over-the-counter (OTC) trading desks.
According to data from CryptoQuant, OTC desk inventories have dropped to 120,000 BTC, down dramatically from nearly 500,000 BTC in late 2021. Centralized exchange reserves are also shrinking, with the combined BTC holdings on platforms like Coinbase and Binance falling to 2.17 million BTC, their lowest level in over six years. This is down from 2.72 million BTC in January 2024.
Such a steep supply drop, combined with growing demand, increases the likelihood of a supply squeeze, which typically drives prices higher.
Institutional and Government Demand Accelerates
The supply crunch is being intensified by the aggressive accumulation from institutional players. Spot Bitcoin ETFs have attracted over $40 billion in inflows since their launch last year, underscoring renewed investor confidence.
At the forefront of corporate adoption is Strategy, now holding 568,500 BTC worth approximately $59 billion — making up 2.7% of Bitcoin’s total capped supply. Since its initial BTC purchase in 2020, Strategy’s market capitalization has surged from $1 billion to over $115 billion, inspiring other companies like Next Technology, Semler Scientific, Cango, and MetaPlanet to follow suit.
Governments are also showing interest. Donald Trump has floated the idea of a Strategic Bitcoin Reserve, while countries such as Ukraine and the Czech Republic are exploring similar avenues.
Technical Setup Points to Breakout
From a technical analysis perspective, Bitcoin’s recent price action is forming a bullish pennant, a continuation pattern typically seen in strong uptrends. The pennant is developing just below a key resistance level at $108,420, the upper rim of a broader cup and handle formation.
Momentum remains strong, with both the 50-day and 100-day Exponential Moving Averages sloping upwards a classic bullish signal.
Should Bitcoin break above the all-time high of $109,300, the next psychological target is $110,000, a level that could trigger FOMO-driven buying and renewed media attention.With supply hitting multi-year lows and institutional demand hitting new highs, Bitcoin is poised for a potential price breakout. As the market braces for a new phase of adoption including participation from nation-states the pressure on supply could push prices beyond historical records.
Whether through ETF inflows, corporate treasuries, or geopolitical interests, Bitcoin’s appeal as a scarce digital asset is gaining traction. If current trends continue, the next chapter in Bitcoin’s bull run may already be underway.
