Bitcoin Market Faces Supply Squeeze As Scarcity Index Turns Positive Again

[Ben Graham]

After hitting a weekend high of $116,689 on September 15, Bitcoin (BTC) fell slightly, trading just above $114,000 at the time of writing. However, fresh data from Binance crypto exchange indicates that the Bitcoin Scarcity Index recently witnessed its first spike since June 2025.

Bitcoin Scarcity Index Spikes, Will BTC Rally?

According to a CryptoQuant Quicktake post by contributor Arab Chain, the Bitcoin Scarcity Index witnessed its first spike yesterday since June 2025. The analyst referred to the latest exchange data from Binance to confirm the spike in Bitcoin Scarcity Index.

For the uninitiated, the Bitcoin Scarcity Index measures how limited the available supply of Bitcoin is on exchanges relative to immediate buying demand. A spike in the index usually indicates strong accumulation by large investors or institutions, signaling potential price pressure to the upside.

In their analysis, Arab Chain remarked that the latest spike in the Bitcoin Scarcity Index means that either a large amount of BTC was withdrawn from Binance, or the volume of sell orders fell significantly on the exchange.

As a result, the available supply of BTC on Binance suddenly became scarce. Notably, such movements are usually associated with the entry of large investors – such as whales or sharks – who hold substantial quantities of BTC. Arab Chain added:

The index jumps when immediate buying power exceeds available supply, as if buyers are racing to acquire Bitcoin on the market This type of spike is often linked to positive news or sudden capital inflows. The same pattern occurred last June and persisted for several days, after which Bitcoin climbed to around $124,000.

BTC may confirm the beginning of a strong accumulation phase and the continuation of the uptrend if the Bitcoin Scarcity Index remains positive for several consecutive days. 

However, if the index rises rapidly – followed by an equally quick descent – it may suggest speculative activity or order liquidations. Such a phase is often followed by a period of calm or a price correction.

In recent months, the Bitcoin Scarcity Index has reached new all-time highs (ATH). The chart below shows the metric reaching as high as +6, before quickly falling toward neutral and even negative territory.

Is BTC Losing Momentum?

Arab Chain concluded by saying that the contrast between BTC’s high price, and the index’s quick move back to or below zero suggest that some strong buying momentum has started to decline. 

That said, some positive signs persist. For example, the flagship cryptocurrency recently broke above the mid-term holder breakeven, hinting that a fresh rally to the upside may be on the horizon.

From a technical perspective, BTC recently flashed the Golden Cross, a rare bullish signal that has crypto pundits forecasting a potential price appreciation of 100%. At press time, BTC trades at $114,601, down 0.9% in the past 24 hours.