Bitcoin’s arduous cap is straightforward to grasp: there’ll solely ever be 21 million cash.
What’s arduous to grasp is that the marginal market is allowed to commerce excess of 21 million cash price of publicity, as a result of most of that publicity is artificial and cash-settled, and it may be created or diminished in seconds.
That distinction has develop into Bitcoin’s core paradox prior to now yr or so.
Shortage is a property of the asset, whereas worth is a property of the market microstructure that dominates the subsequent aggressive order. When derivatives quantity and leveraged positioning develop into the dominant area, Bitcoin can commerce like an asset with a decent provide and, on the similar time, like an asset with successfully elastic publicity.
21 million cash, however a a lot bigger marginal market
Spot is the one venue the place a commerce essentially strikes precise BTC from one proprietor to a different.
Perpetual and dated futures do not mint cash, however they do create a second market that may develop into bigger, sooner, and extra reflexive than spot. Perps are designed to trace spot via a funding mechanism and will be traded with leverage, which suggests a comparatively small quantity of collateral can management a a lot bigger notional place. That mixture tends to tug exercise into derivatives when merchants need pace, leverage, shorting means, and capital effectivity.
Worth discovery is just the place the subsequent significant market order lands. If most urgency lives in perps, then the trail of least resistance is ready there, even when long-term holders by no means contact leverage and even when the underlying provide is mounted. In that regime, strikes are regularly pushed by adjustments in positioning: liquidations, pressured de-risking, hedging flows, and the fast repricing of leverage. These flows can overwhelm the a lot slower means of spot accumulation, as a result of the marginal actor is not selecting whether or not to purchase cash however whether or not so as to add or scale back publicity.
That is additionally why seen order guide assist is a weaker idea than it appears on a chart. Displayed bids will be actual, however they’re conditional. They are often pulled, layered, refreshed, or just outpaced by the quantity coming from the bigger derivatives advanced. Order books are data of resting intent, not execution ensures.
What the information reveals
The Binance BTC/USDT perpetual futures versus spot quantity ratio is the cleanest start line as a result of it quantifies the place exercise is concentrated.
On Feb. 3, the perpetual-to-spot quantity ratio learn 7.87, with $23.51 billion in perpetual quantity towards $2.99 billion in spot whereas BTC traded round $75,770. On Feb. 5, the ratio was nonetheless 6.12, with $15.97 billion in perps quantity towards $2.61 billion in spot, and the worth close to $69,700.
The ratios matter as a result of they don’t seem to be a minor skew; they describe a market the place the dominant supply of turnover is a leveraged, shortable venue. In that setup, the subsequent tick is extra prone to be set by the repricing of publicity than by incremental spot shopping for.
The aggregated order guide liquidity delta provides a second layer: not simply the place quantity traded, however the place liquidity collected close to worth. CoinGlass defines depth delta because the imbalance between bids and asks inside a specified vary, right here ±1% across the present worth, which is a technique to summarize whether or not the seen guide is bid-heavy or offer-heavy.
The largest footprint seems on the derivatives facet proper because the market was coming into the drawdown window. Futures liquidity delta printed +$297.75 million on Jan. 31 at 14:00 with BTC round $82,767. Spot later confirmed +$95.32 million at 18:00 round $78,893. Even by Feb. 5 at 14:00, spot delta nonetheless confirmed +$36.66 million with BTC close to $69,486.
This knowledge reveals a market the place spot bids existed and, in some moments, grew, however worth nonetheless stored sliding. When you settle for the hierarchy the place derivatives are the dominant class, this stops being a contradiction. Displayed liquidity close to spot can enhance whereas the bigger derivatives venue continues to power repricing via leverage discount, quick stress, or hedging. When perps dominate turnover, the marginal vendor is not an actual person who’s misplaced conviction, it is only a supervisor managing positions.
Now add the third channel that buyers are inclined to deal with because the definitive spot proxy: US spot Bitcoin ETFs. The stream sequence we have seen in final week appears like a tug-of-war relatively than a steering wheel aimed on the cliff.
Heavy outflows hit on Jan. 21 at about -$708.7 million, then Jan. 29 at about -$817.8 million, then Jan. 30 at about -$509.7 million. Feb. 2 flipped sharply constructive at about +$561.8 million, then reverted to -$272.0 million on Feb. 3 and -$544.9 million on Feb. 4.
Public stream tallies like these are broadly tracked via aggregators akin to Farside and are regularly referenced in market protection, however they fail map one-for-one to intraday worth when the derivatives venue is setting the marginal commerce.
It is also price being exact about what an ETF stream is and isn’t. Creations and redemptions are executed via approved members. Relying on the product and regulatory permissions, these processes will be cash-based or in-kind, which adjustments how immediately ETF exercise interprets into spot market transactions in BTC.
In mid-2025, the SEC authorised orders allowing in-kind creations and redemptions for crypto ETPs, which is particularly about permitting approved members to create or redeem shares utilizing the underlying crypto relatively than solely money, bringing the operational construction nearer to different commodity ETPs. (SEC) Even with that construction, ETF flows nonetheless sit alongside derivatives positioning, vendor hedging, and alternate liquidity, which might dominate short-horizon worth formation.
Lastly, alternate reserve knowledge anchors this summary knowledge into one thing extra tangible: the quantity of BTC sitting on exchanges, which is a proxy for instantly tradable stock.
From Jan. 15 to Feb. 5, all-exchange BTC reserves rose by 29,048 BTC, a 1.067% enhance, reaching simply over 2.75 million BTC.
This issues as a result of it separates two concepts which can be usually blended collectively.
Bitcoin will be scarce in complete provide and nonetheless really feel properly provided on the level of transaction if alternate stock rises right into a risk-off window. ETF inflows will be constructive and but the tradable float can increase by way of deposits, treasury strikes, or repositioning by massive holders. And even when the tradable float tightens, derivatives can nonetheless amplify volatility as a result of publicity will be added or eliminated sooner than cash can transfer.
A shortage mannequin that matches how Bitcoin trades
A helpful technique to reconcile all of that is to deal with Bitcoin shortage as a stack of time horizons relatively than a single quantity.
On the slowest layer is protocol provide, which is mounted by design. That is the layer the 21 million cap describes.
On the center layer is the tradable float, which is what can realistically hit the market with out friction. Trade reserves aren’t one of the best proxy for this, however they’re directionally helpful as a result of they measure cash which can be already sitting on a platform constructed for fast transaction.
On the quick layer is the artificial publicity: perps, dated futures, and choices. This layer can increase or contract extraordinarily shortly as a result of it is constrained by collateral and threat limits, not by coin motion. When exercise concentrates right here, a big share of the market is expressing views via leverage and hedges, not via coin acquisition.
On the remaining layer is the marginal commerce itself: the subsequent pressured purchase or promote that clears via probably the most energetic venue. The perpetual-to-spot quantity ratios which have been sitting between roughly 6 and eight, mixed with the bigger liquidity delta prints on futures, present a market the place that marginal commerce was occurring in derivatives, not in spot.
That framing tells us that shortage is actual, but it surely does not assure day-to-day tightness. The market can commerce scarce belongings via considerable publicity, and the venue with probably the most pressing stream tends to set the subsequent worth.
That is why we have to deal with ETF flows, alternate reserves, and derivatives dominance as three separate lenses that may disagree within the quick run. After they line up, strikes are usually cleaner. After they diverge, you’ll be able to see precisely what the charts present: bids seem, narratives whip round, and worth nonetheless bleeds as a result of the marginal market is elsewhere.