Bitcoin's hard cap is easy to understand. There are only 21 million coins in existence.
What is difficult to understand is that the marginal market allows trading exposures of well over 21 million coins. Because most of its exposures are synthetic and cash-settled and can be created or reduced in seconds.
This difference has become Bitcoin's core paradox over the past year or so.
While scarcity is a property of an asset, price is a property of the market microstructure that governs the next active order. As derivative volume and leveraged positioning become a dominant field, Bitcoin can be traded like an asset with tight supply while at the same time being able to trade like an asset with essentially flexible exposure.
21 million coins, but a much larger marginal market
Spot is the only venue where a transaction necessarily moves actual BTC from one owner to another.
Perpetual futures and dated futures do not mint coins, but create a second market that can be larger, faster, and more reflexive than spot. Perps are designed to track the physical through a funding mechanism and can be traded with leverage, meaning you can control much larger notional positions with a relatively small amount of collateral. This combination tends to draw activity into derivatives when traders seek speed, leverage, short selling ability, and capital efficiency.
Price discovery is simply where the next meaningful market order lands. If the greatest urgency is in PERP, the path of least resistance is set there, even if long-term holders never touch leverage and the underlying supply is fixed. In this regime, movements are often triggered by positioning changes, such as liquidations, forced de-risking, hedging flows, and rapid re-pricing of leverage. These flows can overwhelm the much slower process of spot accumulation, as marginal actors are choosing whether to add or reduce exposure, rather than whether to purchase coins.
This is also why visible order book support is a weaker concept than it looks on the chart. The bids shown may be real, but are subject to conditions. They can draw on, overlap, renew, or simply overtake volume from larger derivatives complexes. The order book is a record of pending intent and does not guarantee execution.
What the data shows
The Binance BTC/USDT Perpetual Futures to Spot Volume Ratio is the cleanest starting point as it quantifies where activity is concentrated.
On February 3, the ratio of perpetual trades to spot trading volume was 7.87, with spot trades of $2.99 billion and perpetual trades of $23.51 billion, with BTC trading at approximately $75,770. As of February 5, the ratio was still 6.12, with a P/E ratio of $15.97 billion and a price of nearly $69,700 on spot volume of $2.61 billion.
Ratios are important because they are not just a slight bias. They describe a market where the primary source of revenue is a leveraged short selling venue. With this setup, the next tick is more likely to be set by exposure repricing than by incremental spot purchases.
The liquidity delta in the aggregated order book adds a second layer: not only where volume is traded, but also where liquidity accumulates around price. CoinGlass defines depth delta as the imbalance between bids and asks within a specified range (here ±1% of current price) and is a way to summarize whether the book being viewed has more bids or more offers.
The largest footprint appears on the derivatives side just after the market enters the drawdown window. Futures liquidity delta printed +$297.75 million at 14:00 on January 31st, while BTC was around $82,767. The spot then read +$95.32 million at around $78,893 as of 18:00. By 14:00 on February 5th, spot delta still showed +$36.66 million and BTC was close to $69,486.
This data shows a market where spot bidding existed and grew in some moments, but prices still continued to fall. Once we accept the hierarchy in which derivatives are the dominant class, this is no longer a contradiction. Indicative liquidity near spot is likely to improve while large derivatives exchanges continue to force repricing through deleveraging, short pressure, or hedging. When criminals control sales, marginal sellers are not real people who have lost their faith, but only managers controlling positions.
Now we add a third channel that investors tend to treat as the definitive spot agent: the US Spot Bitcoin ETF. The sequence we saw last week looks more like a tug-of-war than steering toward a cliff.
The big outflow was about -$708.7 million on January 21st, followed by -$817.8 million on January 29th, and -$509.7 million on January 30th. On February 2nd, it suddenly turned positive with approximately +561.8 million dollars, but on February 3rd it was -272 million dollars, and on February 4th it returned to -544.9 million dollars.
Such aggregations of public flows are widely tracked through aggregators such as Farside and frequently referenced in market coverage, but they cannot be mapped one-to-one to intraday prices when derivatives exchanges set marginal trades.
It's also important to understand exactly what ETF flows are and are not. Creation and redemption are performed through authorized participants. Depending on the product and regulatory permissions, these processes can be cash-based or spot-based, which changes how ETF activity directly translates into spot market transactions in BTC.
In mid-2025, the SEC approved an order allowing the physical creation and redemption of virtual currency ETP. This specifically allows authorized participants to create or redeem shares using the underlying virtual currency rather than only cash, bringing the operating structure closer to other commodity ETPs. (SEC) Even with such a structure, ETF flows are still aligned with derivative positioning, dealer hedging, and currency liquidity, which can dominate short-term price formation.
Finally, exchange reserve data anchors this abstract data into something more concrete: the amount of BTC present on an exchange, acting as a proxy for ready-to-trade inventory.
From January 15th to February 5th, BTC reserves across all exchanges increased by 1.067% to 29,048 BTC, reaching over 2.75 million BTC.
This is important because it separates two ideas that are often mixed together.
Even though Bitcoin is in short supply in total, it may still feel like there is sufficient supply at the time of the transaction if the exchange's inventory rises to the risk-off window. While ETF inflows can be positive, the tradable float can still grow due to deposits, Treasury moves, or position changes by large holders. And even if the tradable float tightens, derivatives can still amplify volatility as exposure can be added or removed faster than the coin moves.
A scarcity model that matches the way Bitcoin is traded
A useful way to reconcile all of this is to treat Bitcoin scarcity as a series of time frames rather than a single number.
The slowest layer is the protocol supply, which is fixed by design. That's the demographic the 21 million cap represents.
The middle tier has a tradable float that can realistically be brought to market without friction. Exchange reserves aren't the best vehicle for this, but they can help directionally, as they measure the coins that already exist on a platform built for quick trading.
The high-velocity tier includes synthetic exposures such as PERP, dated futures, and options. This tier is limited by collateral and risk limits rather than coin movement, so it can expand or contract very quickly. When activity is concentrated here, a large portion of the market expresses its opinion through leverage and hedging rather than coin acquisition.
The final layer is the marginal trade itself. That is, the next forced buy and sell that passes through the most active arena. Perpetual to spot volume ratios have hovered around between 6 and 8, which, when combined with the larger liquidity delta print in futures, indicates a market whose marginal trades are taking place in derivatives rather than spot.
This framework shows that scarcity is a reality, but it does not guarantee daily strain. Markets can trade rare assets through rich exposure, and where the most urgent flows occur tends to set the next price.
That's why we need to treat ETF flows, exchange reserves, and derivatives advantages as three separate lenses that may differ in the short term. They tend to move more neatly when lined up. When they diverge, you can see exactly what the chart is showing. Bids appear, stories fly, and prices are still bleeding because the marginal market is elsewhere.
