Bitcoin indicators suggest a potential breakout, yet a significant “underwater” supply barrier is keeping prices below $93,000.

Bitcoin (BTC) is set to conclude 2025 with over $112 billion invested in US spot ETFs, exchange reserves at an unprecedented low of 2.751 million BTC, and perpetual futures open interest nearing $30 billion.

Each of these metrics would have appeared positive in 2022. By late 2025, they correspond to a similar scenario: prices fluctuating between $81,000 and $93,000 while narratives remain optimistic and volatility is kept in check.

The disparity between the data and market behavior illustrates structural stagnation. In this environment, liquidity is present but not flowing, capital is substantial yet fragmented, and the infrastructure fails to convert headline demand into directional confidence.

The indication came on December 17, when Bitcoin liquidated $120 million in shorts and $200 million in longs within a few hours, not due to a surge in leverage but because order books could not handle the round-trip without causing whipsaw effects.

Spot depth on leading centralized exchanges appears satisfactory on the surface. CoinGecko’s June 2025 report estimates the median BTC order-book depth at $20 million to $25 million on each side, within ±$100 of the mid-price across eight major platforms.

Binance alone contributes approximately $8 million on both the bid and ask sides, representing 32% of the total. Bitget has $4.6 million, while OKX holds $3.7 million. When focusing on a ±$10 range, only Binance exceeds $1 million on each side.

Most other exchanges range between $100,000 and $500,000, with Kraken and Coinbase closer to $100,000. This constitutes institutional-grade depth if investors are trading a few hundred coins.

However, it becomes fragile if a medium-sized fund opts to rebalance or if a macro event triggers simultaneous unwinding across platforms.

Kaiko’s February 2025 liquidity ranking highlights the imbalance: market depth has returned to pre-FTX levels for Bitcoin, Ethereum, Solana, and XRP, yet over half of the top 50 tokens by market capitalization still fail to achieve $200 million in average daily volume.

Bitcoin, Ethereum, XRP, and Solana top Kaiko’s liquidity rankings, while more than half of the top 50 tokens score below 100 points. Image: Kaiko

Liquidity outside the major assets deteriorates rapidly, and Kaiko notes that when trading activity intensifies relative to available depth, price impact increases non-linearly. The infrastructure has recovered; however, the capacity has not expanded.

Blood-flow problem

Low exchange reserves clearly correspond to bullish supply dynamics: fewer coins on exchanges imply less inventory available for sale.

This reasoning falters when coins cease to move between exchanges. CryptoQuant’s Inter-Exchange Flow Pulse (IFP) has diminished throughout 2025, suggesting that arbitrageurs and market makers are less engaged in transferring Bitcoin across venues to take advantage of price discrepancies.

A lower IFP reduces the overall order book and makes prices more reactive to individual orders, even minor ones. When record-low reserves coincide with weak inter-exchange circulation, scarcity manifests as fragility rather than mechanical strength.

Bitcoin’s Inter-Exchange Flow Pulse sharply declined in 2025, indicating diminished arbitrage activity and weaker liquidity circulation between trading venues. Image: CryptoQuant

Binance adds complexity to the situation. While most major exchanges report net BTC outflows, Binance has seen net inflows, concentrating tradable inventory on the single venue where price discovery occurs.

This centralization undermines the “low reserves equals bullish” narrative, as sellable supply is accumulating precisely where liquidity is most critical.

If depth is shallow elsewhere and concentrated on one platform, any significant flow, whether from ETF redemptions, macro-driven selling, or derivatives unwinding, encounters the same bottleneck.

Derivatives reset without conviction

Perpetual futures open interest fell from cycle highs near $50 billion to about $28 billion by mid-December, according to a recent report from Glassnode. This represents a nearly 50% reduction in the market’s capacity to accommodate directional bets.

Bitcoin perpetual futures open interest decreased from cycle highs near $50 billion to approximately $28 billion by December 2025, while funding rates remained close to neutral. Image: Glassnode

Funding rates remained near the 0.01% baseline during the recent selloff, rather than spiking in either direction, and Binance’s late-October funding note indicates BTC and major alt perpetuals are positioned near neutral with minimal deviation.

The market is not incentivizing long or short positions, as positioning has been de-risked rather than re-leveraged.

Options positioning introduces an additional constraint. The same Glassnode report highlighted Bitcoin encountering a “hidden supply wall” between $93,000 and $120,000, where the short-term holder cost basis is around $101,500 and approximately 6.7 million BTC, or 23.7% of circulating supply, is trading at a loss.

About 360,000 BTC of recent selling originated from holders realizing losses. This loss-bearing supply transitions into the long-term holder category, which historically precedes either capitulation or prolonged range-bound trading.

December 26 marks the year’s largest options expiry, with significant gamma positioning keeping the spot price within an $81,000-$93,000 range until those contracts expire. Derivatives are not driving volatility but rather suppressing it.

ETF flows as noise, not signal

US spot Bitcoin ETFs hold approximately 1.3 million BTC, about 6.5% of the market capitalization, with cumulative net inflows totaling $57.5 billion as of December 18, according to data from Farside Investors.

This positions the ETF channel as structurally significant, yet not directionally dependable. The flow pattern in December was erratic: December 15 recorded $357.6 million in net outflows, December 16 saw another $277.2 million, and then December 17 reversed with $457.3 million in net inflows, primarily driven by Fidelity’s FBTC and BlackRock’s IBIT.

US spot Bitcoin ETF cumulative net inflows reached $57.5 billion by December 18, 2025, with daily flows exhibiting increased volatility in recent months. Image: Farside Investors

On December 15, Bitcoin remained near $87,000 even as ETFs experienced over $350 million in outflows in a single day, highlighting that ETF flows are now substantial enough to influence intraday sentiment but not consistently additive to price.

The vehicle is responding to macro expectations and rate policies, rather than providing a steady “up only” momentum.

What stagnation looks like in Q1 2026

Structural stagnation is not a bearish forecast, but rather a liquidity environment.

Spot books on leading centralized exchanges have returned to pre-FTX levels for Bitcoin. Nevertheless, close-to-mid liquidity remains in the low single-digit millions per side on most platforms and is predominantly concentrated on Binance.

On-exchange reserves are at historic lows, but inter-exchange flows have plummeted, resulting in thin order books that lead to increased slippage and greater price impact for the same notional.

Perpetual open interest has reset, funding remains neutral, and options combined with overhead spot supply between $93,000 and $120,000 mechanically confine Bitcoin to a range until new capital or a macro catalyst compels repositioning.

ETF flows fluctuate by hundreds of millions of dollars daily, but the direction shifts based on rate data, employment reports, and Fed guidance rather than crypto-specific fundamentals.

Unless one of three factors changes, Bitcoin may experience bullish headlines, new products, and expanding infrastructure while price action continues to be volatile and range-bound through the first half of 2026.

Liquidity is present, but it is stagnant. The infrastructure is of institutional quality, yet it is not prepared for scaling. The capital is substantial, but it is dispersed across various venues, wrappers, and jurisdictions.

This encapsulates the essence of structural stagnation: not broken, not bearish, merely constrained by its own infrastructure until something triggers the next movement.

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