Bitcoin ETFs Flooded With Billions, But BTC Stands Still – Why?

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

Despite the significant influx to the spot Bitcoin [BTC] Exchange-traded funds (ETFs), the expected corresponding rise in the price of Bitcoin has yet to materialize, leaving investors and analysts perplexed.

Reports indicate an unprecedented rise in interest and capital inflows for these financial products, highlighting burgeoning enthusiasm in the cryptocurrency space.

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

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

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

Despite the substantial increase in spot ETFs over the past week, Bitcoin has only seen a modest 4.3% increase over the same period.

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

Impact of ETFs on Bitcoin

The current stagnation in the price of Bitcoin, despite significant inflows into ETFs, raises questions about the real impact of these financial instruments on the market value of the cryptocurrency.

Experts suggest that several factors come into play and dilute the influence of ETFs on the price of Bitcoin.

According to Christopher Inks, a veteran cryptocurrency expert, the dynamics of the Bitcoin market are complex, influenced by a fusion of spot trading, futures, options and now ETFs.

Ink highlighted the multifaceted nature of the market, indicating that focusing solely on ETF activity provides an incomplete picture of price movements.

In response to user X who asked why spot ETFs don’t move the price of BTC, Ink replied:

“You do realize that the market is made up of spots, futures, ETFs and options, right? At any point in time, the price is the product of all of these elements, not just one of them.

Further discussions between 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.

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Balchunas pointed out that even if ETFs buy aggressively, other market participants sell equivalently, thus keeping the price in equilibrium.

This phenomenon is often described as “buy the rumor, sell the news”, where the market’s anticipation of an event (such as ETF approval) causes prices to rise temporarily, only to stabilize or fall once the event materializes.

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

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

“If ETFs are buying, it’s because someone is selling.”

Analyze the stability of Bitcoin

Examining Bitcoin’s fundamentals sheds light on why its price has yet to reflect the growing inflows into spot Bitcoin ETFs. According to Glass knotThe circulating supply of Bitcoin has been on an upward trend since the start of the year.

Source: Glassnode

Typically, an increase in circulating supply suggests that more BTC is available for sale, which could cause prices to fall if demand decreases.

However, continued demand for spot Bitcoin ETFs appears to be absorbing enough supply to maintain current price levels, but not enough to drive prices significantly higher.

Additionally, open interest dynamics also support current Bitcoin price trends.

Data of Coinglass indicates that there has been no significant movement in Bitcoin open interest; it saw only a slight increase of 0.8% over the past 24 hours, while options volume declined by almost 40%.

This slight increase in open positions, coupled with a decline in options volume, suggests a sense of caution in the market.

Source: Coinglass

Read Bitcoin [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 may rise in the near future.

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