Demand for US Bitcoin ETFs Surges with Record Inflows
US Bitcoin spot ETFs have seen a surge in demand, surpassing $1 billion in daily net inflows for the first time. The Grayscale Bitcoin Trust (GBTC) has experienced consistent outflows, while BlackRock’s iShares Bitcoin Trust (IBIT) attracted a record $849 million. Smaller rivals like VanEck also saw significant inflows.
ETF Demand Breaks Records
The demand for US Bitcoin spot ETFs has been relentless since their launch on January 11, accumulating $11.1 billion in net inflows within just two months. This performance has exceeded experts’ expectations and has contributed to Bitcoin reaching new all-time highs, even before its periodic halving.
Liquidity Crisis Concerns
The ten ETF funds now hold over 800,000 BTC, which represents almost 4% of the entire BTC supply that will ever exist. Some analysts speculate that if this rate of coin accumulation continues, it could lead to a liquidity crisis in the Bitcoin market, as available supply may not be able to meet the overwhelming demand.
Potential Sell-Side Liquidity Crisis
CryptoQuant CEO Ki Young Ju warns that a sell-side liquidity crisis could occur within six months if ETF inflows continue at their current rate. This crisis could cause Bitcoin’s “cyclical top” to exceed expectations as buy orders flood into thinly-traded Bitcoin order books.
Bitcoin Exchanges Experience Strong Outflows
Despite the high demand for ETFs, data from CryptoQuant’s Exchange Netflow dashboard reveals that Bitcoin exchanges have experienced more outflows than inflows over the past month. A high outflow value indicates selling pressure on spot exchanges and can also indicate high volatility on derivative exchanges.
Mixed Data on Bitcoin Miners
Data on Bitcoin miners is more mixed. On one hand, miner revenues are reaching extreme levels as the price of Bitcoin continues to rise, suggesting that miners may be selling some of their coins. On the other hand, major miners like Marathon Digital and Riot Platforms are increasing their holdings of Bitcoin.
Continued Bull Market Expected
According to Ki Young Ju, the bull market will continue as long as ETF inflows remain strong. He believes that a slowdown in ETF inflows would be necessary for the market to shift.
Hot Take: Increasing Demand for Bitcoin ETFs Raises Concerns
The demand for US Bitcoin spot ETFs has reached record levels, with daily net inflows surpassing $1 billion. While this surge in demand has driven Bitcoin to new all-time highs, concerns about a potential liquidity crisis have also emerged. The accumulation of BTC by these ETFs could lead to a shortage of available supply, causing a sell-side liquidity crisis in the market. Additionally, data from CryptoQuant suggests that Bitcoin exchanges have experienced stronger outflows than inflows recently. However, the situation among Bitcoin miners is more mixed, with some selling their coins while others continue to accumulate. Despite these uncertainties, many analysts believe that as long as ETF inflows remain strong, the bull market will continue.
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