In the past three months, U.S. Bitcoin spot ETFs have attracted a total of $12.3 billion in investments. But the question is, what effect have these ETFs had on the larger Bitcoin market?
On Wednesday, James Check, an analyst at Glassnode, shared insights about the impact of Bitcoin ETFs on the market in comparison to its current futures and spot markets, based on on-chain data analysis.
Grayscale And Long Term Holders
The analyst initiated their investigation by looking into the Grayscale Bitcoin Trust (GBTC), which is the only newly introduced Bitcoin ETF experiencing significant and continuous withdrawals since January 11.
Since then, about 300,000 Bitcoins worth of value have been lost by the fund, which is almost half of its entire Bitcoin holdings. Yet, due to the increasing worth of the remaining Bitcoins on their balance sheet, the fund’s net asset value has dropped from $28.7 billion to $23.1 billion. This significant decrease in value leaves ample potential for further selling pressure from the fund.
According to Check’s statement, GBTC is expected to be categorized as long-term supply since most of its coins are owned by older investors. These investors bought their shares at a significantly lower cost than their competitors, providing them with a stronger motivation to sell as Bitcoin’s price increases.
He explained, “The way it operates hasn’t changed significantly for long-term Bitcoin holders.” He went on, “Once we reach new record highs, some investors typically choose to sell their Bitcoins. This trend has been observed throughout past Bitcoin market cycles.”
Bitcoin ETFs: One-Third Of The Market
Recently, Glassnode reported that the number of Bitcoins held by long-term investors, or those who have owned their coins for over five months, has significantly increased, reaching levels seen during past bull markets. Notably, it was mentioned that approximately one-third of all spending by long-term Bitcoin holders in recent times can be attributed to Grayscale Bitcoin Trust (GBTC).
By examining the net inflows of other Bitcoin ETFs, Check analyzed the difference between these figures and the total amount of capital that flowed into the Bitcoin network as indicated by its “realized cap” – a measure based on on-chain transactions. While Bitcoin ETFs recorded inflows of approximately $28.5 billion, the Bitcoin network itself experienced an influx of around $52 billion.
In terms of size, Check mentioned that ETFs for Bitcoin are roughly half the size of the conventional Bitcoin spot market. The spot market makes up the smaller portion, around 50%, while the futures market accounts for the vast majority of Bitcoin trading, representing approximately 80% to 85%.
From different viewpoints, such as trading volume, long-term investor expenditures, or ETF investments, the magnitude is approximately between thirty and fifty percent, according to Check’s assessment.
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2024-04-10 02:06