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Bitcoin needs to avoid a “local top” as institutions pile into the United States spot Bitcoin exchange-traded funds (ETFs).
Bitcoin ETF inflows see mixed reactions
US spot Bitcoin ETF netflows (screenshot). Source: Farside Investors
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.
“The last couple of times the Bitcoin ETF flows were ~$900m+ and Price was > 70k, it signaled a local top. Just something to think about,” Cullen acknowledged.
Larger ETF inflows have become synonymous with bad omens for BTC price performance, but there is a chance the current trend may be an exception.
“With another huge inflow day for the Bitcoin ETF’s but little to no progress in price, lets hope the ETF FOMO isn’t going to mark a local top again this close to a new ATH,” Cullen said.
US spot Bitcoin ETF flows vs. BTC/USD chart. Source: Mark Cullen/X
Unlike earlier in the year, the amount of BTC available on so-called over-the-counter (OTC) desks is large enough to form a buying venue for the ETFs. This, onchain analytics platform, CryptoQuant said, allows large purchases that do not impact the spot price.
“Higher Bitcoin availability on OTC desks makes daily purchases from ETFs add up to a lower share of inventory,” said its latest weekly report seen by Cointelegraph.
“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.”
Bitcoin ETF demand to OTC balance ratio (screenshot). Source: CryptoQuant
For the status quo to change, CryptoQuant said, ETF demand would need to be even higher.
“The bright spot is that OTC desks’ total Bitcoin balance is no longer growing at the pace it did in Q2–Q3 2024,” it added.
“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
Clemente referred to the largest ETF product from asset management giant BlackRock, the iShares Bitcoin Trust (IBIT), whose net inflows totaled $875 million on Oct. 30.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.