Bitcoin holdings held by over-the-counter (OTC) desks have fallen to about 123,000 BTC, shrinking to roughly one-quarter of the September 2021 level. As bitcoin supply waiting in the OTC market drops sharply, analysts say changes are also emerging in the market’s circulation structure.

CoinPost reported on Sunday that on-chain analyst Darkfost said bitcoin reserves stored at known OTC desk addresses have declined to a past low.

Based on CryptoQuant data, OTC desk bitcoin holdings stood at about 500,000 BTC in September 2021 but have now fallen to around 123,000 BTC. That amounts to a roughly 75 percent decline in holdings in about 5 years.

An OTC desk is a channel for off-exchange trades in which large transactions are agreed separately with a counterparty rather than placing orders directly on an exchange order book. Institutional investors and mining firms mainly use it to avoid sharp price moves caused by large orders.

OTC desk holdings are therefore used as one of the indicators showing how much bitcoin can be supplied to the market immediately from outside exchanges. That is why the decline is drawing attention.

Darkfost raised the possibility that the drop in OTC desk reserves could be linked to changes in the structure of bitcoin holdings, beyond a simple reduction in inventory. He said investors may have become more inclined to hold bitcoin long term rather than sell easily, or large holders may have had less need to offload coins via OTC channels as in the past.

A broader distribution of bitcoin holdings among more participants may also have played a role. In the past, large amounts were concentrated in a few OTC channels, but holdings may now be split among various market participants, reducing the bitcoin that accumulates at OTC desks.

Trading methods themselves may also have changed. Some large investors may sell directly in public markets without using OTC, or buyers may face a shortage of coins available in the OTC market and instead purchase bitcoin directly on exchanges.

This is also focusing market attention on how the decline in OTC desk supply could affect bitcoin prices. If supply through the OTC market shrinks, buying demand could shift to exchanges, potentially increasing buying pressure in public markets.

Still, OTC desk holdings do not directly mean bitcoin prices will rise. Because the figures are compiled based on confirmed OTC desk addresses, they may not fully reflect total OTC market volume.

Even so, the prolonged decline in OTC desk holdings from about 500,000 BTC in 2021 to around 123,000 BTC now can be seen as an indicator that bitcoin’s circulation and trading structure is changing. Whether shrinking OTC supply links to actual exchange buying will be a key point to watch in the bitcoin market.