Bitcoin ETFs flooded with billions, but BTC stands still – Why?

  • Despite billions in inflows to Bitcoin ETFs, BTC price shows minimal movement. Experts weigh in
  • Fundamental data shows interesting trends that include high circulating supply and balancing acts between buyers and sellers.

Despite the significant inflow into spot Bitcoin [BTC] Exchange Traded Funds (ETFs), the expected corresponding rise in Bitcoin’s price has yet to materialize, puzzling investors and analysts alike. 

Reports indicate an unprecedented surge in interest and capital inflow into these financial products, highlighting a burgeoning enthusiasm in the cryptocurrency space.

In the past few weeks, these ETFs have experienced a record inflow, marking the longest streak of positive flows since their inception, with BlackRock’s IBIT leading the pack with substantial net inflows.

On 7th June alone, the 11 spot Bitcoin ETFs tracked a collective net inflow of over $200 million, spearheaded by a $350 million influx into IBIT.

This culminated in a staggering $15.56 billion net inflow since January. 

Despite the substantial surge in spot ETFs over the past week, Bitcoin has witnessed only a modest increase of 4.3% during the same timeframe.

Over the last 24 hours, the cryptocurrency has struggled to gain further momentum, with its price hovering just above $71,000.

ETF impact on Bitcoin

The current stagnation in Bitcoin’s price, despite substantial ETF inflows, raises questions about the actual impact of these financial instruments on the cryptocurrency’s market value. 

Experts suggest multiple factors are at play that dilute the ETFs’ influence on Bitcoin’s price.

According to Christopher Inks, a seasoned crypto trade, the market dynamics of Bitcoin are complex, influenced by an amalgamation of spot trading, futures, options, and now ETFs.

Ink emphasized the multifaceted nature of the market, indicating that focusing solely on ETF activities offers an incomplete picture of price movements.

Responding to an X user who asked why the spot ETFs are not moving BTC’s price, Ink replied:

You do realize the market is made up of spot, futures, ETFs, and options, right? Price at any point in time is a product of all of these, not just one of them.”

Further discussions among financial experts, including a notable exchange between investor Frank Makrides and Bloomberg ETF analyst Eric Balchunas, shed light on the nuanced interplay of market forces. 

Screenshot 2024 06 07 at 09.31.20

Source: X

Balchunas pointed out that while ETFs are buying aggressively, there is equivalent selling from other market participants, maintaining the price at a balance.

This phenomenon is often described as ‘buy the rumor, sell the news,’ where market anticipation of an event (like the approval of ETFs) drives up prices temporarily, only to stabilize or drop once the event materializes.

Jimie, another analyst, highlighted that while ETFs now hold approximately 5% of the total circulating Bitcoin supply, the remaining 95% is controlled by a diverse group of investors, including whales, whose trading activities significantly sway the market. 

Screenshot 2024 06 07 at 09.34.47Screenshot 2024 06 07 at 09.34.47

Source: X

This perspective was echoed by community reactions under Frank Makrides’s X post, where users like Patrick Hubbard noted,

“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 mirrored the rising inflows into spot Bitcoin ETFs. According to Glassnode, Bitcoin’s circulating supply has been on an uptrend since the beginning of the year. 

glassnode studio bitcoin circulating supply btcglassnode studio bitcoin circulating supply btc

Source: Glassnode

Typically, an increase in circulating supply suggests more BTC are available for sale, which could lead to a price drop if demand decreases.

However, the ongoing demand from spot Bitcoin ETFs seems to be absorbing sufficient supply to maintain current price levels, although not enough to significantly drive prices higher.

Moreover, the dynamics of open interest also support the current pricing trends of Bitcoin.

Data from Coinglass indicates that there has been no significant movement in Bitcoin’s open interest; it recorded only a minor increase of 0.8% over the past 24 hours, while options volume has declined by nearly 40%.

This slight uptick in open interest, coupled with a decline in options volume, suggests a cautious market sentiment.

Screenshot 2024 06 07 at 09.37.17Screenshot 2024 06 07 at 09.37.17

Source: Coinglass

Read Bitcoin’s [BTC] Price Prediction 2024-25

Despite these factors, there are signs of potential upward movement. A recent AMBCrypto report highlighted a bullish crossover in Bitcoin’s MACD on its daily chart.

Additionally, Bitcoin’s Relative Strength Index (RSI) remains well above the neutral threshold, indicating that prices might rise in the near future.

Next: Cardano sees major sell-off: Is a price drop imminent for ADA?

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