Bitcoin Spot Market Dries Up: Relentless Buying Off Exchanges Powers Growth

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Bitcoin is trading at a pivotal level after losing key support zones, triggering concerns among investors about a potential deeper correction. After spending over two weeks consolidating in a tight range, BTC broke down sharply, reaching lows around $112,000. This sudden drop has shaken market sentiment, with some analysts warning of further downside if demand fails to absorb the recent selling pressure.

However, not all indicators are flashing red. Top analyst Axel Adler shared compelling data revealing that, starting from the end of February 2024, the average Exchange Netflow on centralized exchanges (CEXs) has been predominantly negative. In fact, Netflows were positive on only two occasions since then, indicating that demand has consistently outpaced supply during this period. This sustained outflow of Bitcoin from exchanges signals strong accumulation trends, as investors continue to withdraw BTC for long-term holding rather than selling into the market.

While the current price action has sparked fear of a bearish reversal, the underlying demand dynamics suggest that the broader uptrend may still be intact. Whether Bitcoin can defend the $112K support zone and recover in the coming sessions will be crucial in determining the next phase of its market cycle.

Supply Shortage Deepens As Bitcoin Accumulation Persists

According to analyst Axel Adler, Bitcoin’s supply dynamics continue to paint a bullish long-term picture despite recent price volatility. Adler highlights that coins have been consistently bought off exchanges for nearly a year and a half, significantly reducing the available liquidity in the spot market. This persistent outflow has gradually created a supply shortage, which has been a key driver behind Bitcoin’s impressive growth over the past months.

This accumulation trend remains active, with investors — particularly long-term holders and institutional players — continuing to withdraw BTC from exchanges at a steady pace. As liquidity dries up, even moderate demand can trigger outsized price moves, which has fueled much of Bitcoin’s upward trajectory.

However, Adler also points out a growing challenge: as Bitcoin approaches historically overvalued levels, selling pressure is beginning to surface. Short-term holders and profit-takers are becoming more active, especially as BTC tests key psychological price levels. This friction between dwindling supply and increasing profit-taking behavior could lead to heightened volatility in the coming weeks.

If accumulation continues to outpace supply inflows, the broader uptrend could remain intact. Yet, the overvaluation signals suggest a period of consolidation or corrective moves is necessary to reset market conditions before Bitcoin attempts another push toward new highs.

Price Analysis: Key Levels To Watch

Bitcoin is currently trading at $114,937 after facing a sharp correction from its recent all-time high of $123,000. The daily chart shows that BTC lost the critical $115,724 support level, which has now turned into immediate resistance. The price is attempting to retest this level, but the rejection from the 50-day moving average around $115,100 suggests that bulls are struggling to regain momentum.

The price structure reveals a clear breakdown from the tight range formed between $115K and $122K, followed by a lower high formation that indicates weakening bullish strength. Volume has been declining during this rebound attempt, signaling a lack of strong buying interest at current levels. The 100-day moving average at $108,100 serves as the next major support if BTC fails to reclaim $115K.

On the upside, reclaiming the $115,724 level with strong volume would be a bullish sign, potentially triggering a move back toward the $120K-$122K resistance zone. However, failure to break above this level could confirm a bearish retest and increase the likelihood of BTC revisiting the $112K-$110K support range in the coming sessions.

Featured image from Dall-E, chart from TradingView

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