Bitcoin
Bitcoin ETFs Flooded with Billions, But BTC Is Standing Still – Why?
- Despite billions of dollars inflow into Bitcoin ETFs, BTC price shows minimal movement. Experts evaluate
- Fundamental data shows interesting trends that include high supply and balancing acts between buyers and sellers.
Despite the significant influx for spot Bitcoin [BTC] Exchange Traded Funds (ETFs), the expected corresponding increase in the price of Bitcoin has yet to materialize, puzzling investors and analysts.
Reports indicate an unprecedented increase in interest and capital inflows into these financial products, highlighting a growing enthusiasm in the cryptocurrency space.
In recent weeks, these ETFs have seen record inflows, marking the longest streak of positive flows since their inception, with BlackRock’s IBIT leading the pack with substantial net inflows.
On June 7 alone, the 11 spot Bitcoin ETFs recorded a collective net inflow of over $200 million, led by a $350 million inflow into IBIT.
This culminated in an impressive net inflow of $15.56 billion since January.
Despite the substantial increase in spot ETFs last week, Bitcoin only witnessed a modest increase of 4.3% during the same period.
Over the past 24 hours, the cryptocurrency has struggled to gain more momentum, with its price hovering just above $71,000.
ETF Impact on Bitcoin
The current stagnation in the price of Bitcoin, despite substantial ETF inflows, raises questions about the real impact of these financial instruments on the cryptocurrency’s market value.
Experts suggest that several factors are at play that dilute the influence of ETFs on the price of Bitcoin.
According to Christopher Inks, an experienced crypto trader, Bitcoin market dynamics are complex, influenced by an amalgam of spot trading, futures, options and now ETFs.
Ink emphasized the multifaceted nature of the market, indicating that focusing only on ETF activity offers an incomplete picture of price movements.
Responding to user X who asked why spot ETFs are not changing the price of BTC, Ink he responded:
“You realize that the market is made up of spot, futures, ETFs and options, right? The price at any given time is a product of all of them, not just one of them.”
Advance discussions between financial experts, including a notable exchange between investor Frank Makrides and Bloomberg ETF analyst Eric Balchunas, shed light on the subtle interplay of market forces.
Source: X
Balchunas highlighted that although ETFs buy aggressively, there is equivalent selling from other market participants, keeping the price balanced.
This phenomenon is often described as “buy the rumor, sell the news”, where market anticipation of an event (such as the approval of ETFs) temporarily increases prices, only to stabilize or fall when the event materializes.
Jimie, another analyst, highlighted that while ETFs now hold approximately 5% of the total Bitcoin supply in circulation, the remaining 95% is controlled by a diverse group of investors, including whales, whose trading activities significantly influence the market.
Source: X
This perspective was echoed by community reactions to Frank Makrides’ post X, where users like Patrick Hubbard observed,
“If ETFs are buying, it’s because someone is selling.”
Analyzing Bitcoin’s stability
Examining Bitcoin’s fundamentals sheds light on why its price has not yet reflected the growing inflows into spot Bitcoin ETFs. According to GlassnodeThe circulating supply of Bitcoin has been on an upward trend since the beginning of the year.
Source: Glassnode
Typically, an increase in circulating supply suggests that more BTC is available for sale, which could lead to a price drop if demand decreases.
However, continued demand for spot Bitcoin ETFs appears to be absorbing enough supply to maintain current price levels, although not enough to significantly increase prices.
Furthermore, open interest dynamics also support current Bitcoin price trends.
Data from Coinglass indicates that there has been no significant movement in Bitcoin open interest; recorded just a small increase of 0.8% in the last 24 hours, while options volume decreased by almost 40%.
This slight increase in open interest coupled with a decline in options volume suggests cautious market sentiment.
Source: Coinglass
To read Bitcoins [BTC] Price prediction 2024-25
Despite these factors, there are signs of a potential upward movement. A recent report from AMBCrypto highlighted a bullish crossover on Bitcoin’s MACD on your daily chart.
Furthermore, Bitcoin’s Relative Strength Index (RSI) remains well above the neutral threshold, indicating that prices may rise in the near future.