- Bitcoin ETF flows have dropped heavily since the beginning of the week.
- Liquidity inventory ratio rose, meaning supply could support demand for long.
As a seasoned crypto investor with a keen eye on market trends, I find the recent drop in Bitcoin ETF flows concerning. The fact that net outflows have surged since the beginning of the week is a clear indication of waning demand from institutional investors.
Over the past ten days, I’ve observed Bitcoin [BTC] displaying a sideways trend, fluctuating between $61,000 and $65,000 based on CoinMarketCap data. Regrettably, the latest halving event did not significantly impact its upward momentum.
ETF demand stagnating?
According to Julio Moreno, the Head of Research at CryptoQuant, a portion of the decrease can be linked back to decreasing deposits into US spot Exchange-Traded Funds (ETFs).
On the 25th of April, there was a net withdrawal of approximately $217 million from the funds, and an additional $147 million was taken out since the beginning of the week, according to AMBCrypto’s analysis based on SoSo Value data. Over $200 million in Bitcoin was withdrawn during the last week.
As a crypto investor, I’ve observed that since their introduction in early January, these investment vehicles have significantly influenced Bitcoin’s price trend. Positive trading days typically result in price increases, while negative ones lead to decreases.
Available supply could meet demand for a longer period
The decreasing interest in Bitcoin was reflected in the significant decline of new addresses solely holding Bitcoins without any record of selling since late March.
ETFs, which absorb BTCs to back their shares, come under this category.
As a result, the liquidity inventory ratio, representing the length of time sellers can cover the current market demand for an asset with their existing stock, significantly increased from approximately 15 months in late March to around 24 months at present.
What this meant in layman terms was that the available BTC supply would last longer given the thinning demand.
Shivam Thakral, the CEO of Indian cryptocurrency platform BuyUcoin, anticipates that the imminent launch of Hong Kong’s spot Exchange-Traded Funds (ETFs) could reinvigorate interest in Bitcoin as the leading digital currency. As reported by AMBCrypto, Thakral made this observation in a statement released to the publication.
As a researcher studying the cryptocurrency market, I believe that the momentum observed in Bitcoin’s price following the Hong Kong ETF launch may resemble the strong price growth experienced in January. Consequently, this trend could potentially propel Bitcoin to set a new all-time high within the upcoming months.
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2024-04-26 16:07