As a seasoned crypto investor with over a decade of experience in this wild and volatile market, I can’t help but feel a mix of excitement and trepidation as institutions continue to pour money into US spot Bitcoin ETFs. On one hand, it’s encouraging to see mainstream adoption increasing, but on the other, history has a habit of repeating itself, especially in crypto land.
Bitcoin (BTC) needs to avoid a “local top” as institutions pile into the United States spot Bitcoin exchange-traded funds (ETFs).
In a thread on X on Oct. 30, popular analyst Mark Cullen cautioned over potential “ETF FOMO.”
Bitcoin ETF inflows see mixed reactions
Day by day, institutional investors are fueling approximately $200 million USD or more into U.S.-based Bitcoin Exchange-Traded Funds (ETFs) as a result of their investments.
On October 30th, the total amount, as reported by various sources such as Farside Investors (a UK-based investment firm), was almost $900 million, which is the second highest sum they’ve ever recorded.
For longtime market participants, however, their success feels like the elephant in the room. During Bitcoin’s run to current all-time highs in March, ETFs saw similar success, but institutional enthusiasm ultimately formed a multimonth BTC price consolidation.
Cullen pointed out that when Bitcoin ETF inflows exceeded $900 million and the price surpassed $70,000 in recent instances, it may have indicated a temporary peak. It’s worth considering this observation, he added.
In simpler terms, when Exchange-Traded Funds (ETFs) are seeing more investments coming in, it’s often seen as a negative sign for Bitcoin’s price movements. However, it’s also possible that this current trend might buck the usual pattern.
Despite an increased number of investments in Bitcoin ETFs today without significant price increases, let’s cross our fingers that the excitement of ETF investment won’t create another local peak just shy of a new All-Time High (ATH), as stated by Cullen.
As a researcher, I’ve noticed a significant increase in the quantity of Bitcoin available on over-the-counter (OTC) desks, to an extent that it could potentially serve as a buying source for Exchange Traded Funds (ETFs). According to CryptoQuant’s onchain analytics, this allows for large transactions without influencing the spot price.
In simpler terms, the report states that when there’s more Bitcoin available on Over-The-Counter (OTC) trading desks, fewer Bitcoins are being purchased daily from Exchange-Traded Funds (ETFs), representing a smaller proportion of their total inventory.
“Currently, total daily Bitcoin purchases from ETFs represent between 1% and 2% of the total Bitcoin balance on OTC desks. This contrasts with a share of 9%–12% of total OTC balances in Q1 2024.”
For the status quo to change, CryptoQuant said, ETF demand would need to be even higher.
It was noted that the rate at which Over-the-Counter (OTC) desks’ Bitcoin holdings were increasing, as seen from Q2 to Q3 of 2024, has slowed down significantly.
“The 30-day change in OTC desks’ total Bitcoin balance is now 3K Bitcoin, down from +77K in August and +92K Bitcoin in June. Bitcoin prices rallied in Q1 2024 to record highs as the growth in OTC desks’ balance remained mostly in negative territory.”
BTC price discovery anticipated
At the point of this writing on October 31st, the value of Bitcoin (BTC) against the U.S. Dollar (USD) was approximately $72,000, as shown by information from CryptoMoon Markets Pro and TradingView.
In several international currencies like the Euro, Bitcoin prices have reached new record levels. Many analysts now believe that it’s only a matter of time before the USD (US Dollar) becomes the benchmark for Bitcoin’s value again.
William Clemente, co-founder of the crypto research firm Reflexity, explained to his X followers that all the suits who followed the ETF model are now earning profits and can now promote IBIT to their fellow suit acquaintances who just witnessed gold make a remarkable move towards its new value.
On October 30th, Clemente mentioned the significant ETF offering from BlackRock, known as the iShares Bitcoin Trust (IBIT). The accumulated investments into this product amounted to a staggering $875 million that day.
According to Eric Balchunas, an experienced Bitcoin ETF analyst at Bloomberg, it’s likely that the total Bitcoin held by these ETF providers will soon exceed 1 million units.
In a remark about X, it was noted that the ETF product managed by IBIT reached a whopping $30 billion in assets within a staggeringly short span of only 293 days – an unparalleled achievement for such a financial product.
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2024-10-31 11:53