As a seasoned researcher with over two decades of experience in financial markets, I’ve seen my fair share of market cycles and trends. The recent surge in inflows into U.S. spot Bitcoin ETFs has piqued my interest, given the historical precedent it seems to follow.
As a researcher, I’ve observed a surge in investments towards Bitcoin ETFs within the U.S., which has been quite substantial lately. This trend has raised concerns among analysts, as there’s a fear of history repeating itself and potentially leading to a decline in Bitcoin’s market price.
As per the perspective shared by Shubh Varma, CEO and co-founder of Hyblock Capital, this particular activity has often been preceded by falling prices in the past. Given this observation, it seems we might be witnessing an initial drop in prices.
Large spot Bitcoin ETF inflows ignite worries
Varma highlighted an interesting trend: Over the last few days, there have been exceptionally high Bitcoin ETF investments, surpassing $300 million on more than one occasion.
From October 11th to the 21st, Bitcoin ETFs experienced a seven-day run of approximately $2.68 billion in investments as per Farside’s data. However, there was an outflow of $79.1 million on October 22nd.
Oct. 23 resumed recording inflows, with total daily inflows of $192.4 million.
Previously, when there had been significant investments into Bitcoin Spot ETFs (exchange-traded funds), Bitcoin’s value decreased by approximately 13% about three weeks afterward.
Between the 4th and 5th of June, Bitcoin ETF investments increased by a total of $1.37 billion, with inflows of $886.6 million on the 4th and $488.1 million on the 5th. During this period, the price of Bitcoin fluctuated between approximately $68,800 and $70,000.
By June 25, just 20 days later, Bitcoin’s price fell to $60,266.
Analysts say “supply shock” is on the horizon
Varma posited that should history recur and Bitcoin experience a decline, analysts might be eager to observe substantial withdrawals from spot Bitcoin Exchange-Traded Funds (ETFs).
“This could establish a higher low, setting Bitcoin up for a potential run to new all-time highs.”
On the contrary, some analysts suggest that the significant influx could indicate an impending disruption in the supply chain.
As an analyst, I recently came across a statement made by the Chief Investment Officer of North Node Capital, Pentosh1, on October 23rd in a Reddit post. In this statement, Pentosh1, who is also a Bitcoin supporter, expressed his views about the digital currency.
“The BTC ETFs are buying far more Bitcoin than is being mined every day and it’s not even close the past 12 days. When supply shock? When sellers out of coins?”
Market analyst Anup Dhungana speculated that a “supply shock looms large.”
As a researcher delving into the world of cryptocurrencies, I’ve been analyzing data from Deribit exchange, and it appears that Bitcoin options traders are expressing optimism about the potential price of Bitcoin by the end of November. This optimism is based on predictions that Bitcoin’s value could reach approximately $80,000, a significant increase, only three weeks after the US presidential election.
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2024-10-24 20:56