Why Is Bitcoin Stagnant Despite ETF Inflows? Report Answers

Glassnode
has
discussed
in
a
new
report
the
reasons
behind
Bitcoin
moving
sideways
despite
inflows
into
the
spot
exchange-traded
funds
(ETFs).

Why
Bitcoin
Has
Been
Stagnant
Despite
Spot
ETF
Inflows

In
its
latest
weekly
report,
the
analytics
firm

Glassnode
has
talked
about
how
the
impressive
inflows
into
the

US
spot
ETFs
have
failed
to
make
the
price
break
its
sideways
trend.

The
spot
ETFs,
which
the
US
Securities
and
Exchange
Commission
(SEC)
approved
in
January
of
this
year,
have
provided
investors
with
an
alternate
means
of
gaining
exposure
to
the
cryptocurrency.

Related
Reading

These
funds
buy
and
hold
Bitcoin
on
behalf
of
their
users,
letting
them
get
indirect
exposure
to
the
coin’s
price
movements
without
having
to
own
the
asset
itself.

The
more
traditional
investors,
who
don’t
want
to
attempt
to
navigate
cryptocurrency
exchanges
and
wallets,
have
found
the
spot
ETFs
to
be
a
comfortable
investment
option.

Since
their
launch,
the
spot
ETFs
have
brought
large
demand
for
the
asset.
Initially,
these
fresh
capital
inflows
helped
BTC
rise
to
a
new
all-time
high
(ATH),
but
recently,
the
asset
has
been
consolidated.

Below
is
a
chart
that
shows
how
the
combined
reserve
of
these
funds
compares
against
the
other
large
entities
in
the
sector.

The
US
spot
ETF
compared
against
the
total
adjusted
circulating
supply
of
the
asset
|
Source:

Glassnode’s
The
Week
Onchain
–
Week
24,
2024

From
the
graph,
it’s
visible
that
the
spot
ETFs
hold
862,000
BTC.
This
is
more
than
what
the
miners
(excluding
Patoshi)
hold
(706,000
BTC)
but
notably
less
than
the
reserve
of
the
centralized
exchanges
(2.3
million
BTC).

Glassnode
has
noted
that
the
cryptocurrency
exchange

Coinbase
alone
holds
a
big
part
of
the
total
exchange
reserve
and
the
US
spot
ETF
balance
through
its
custody
service.

The
data
in
the
balance
held
by
the
Coinbase
platform
|
Source:

Glassnode’s
The
Week
Onchain
–
Week
24,
2024

“With
Coinbase
serving
both
ETF
clients
and
conventional
on-chain
asset
holders,
the
gravity
of
the
exchange
in
the
market
pricing
process
has
become
significant,”
reads
the
report.

The
data
for
the
whale
deposits
to
the
platform
reveal
a
rising
trend
until
mid-April.

Looks
like
the
indicator’s
value
had
been
quite
high
earlier
in
the
year
|
Source:

Glassnode’s
The
Week
Onchain
–
Week
24,
2024

According
to
the
analytics
firm,
a
significant
portion
of
these
whale
deposits
had
come
from
the
Grayscale
Bitcoin
Trust
(GBTC),
adding
to
the
selling
pressure
in
the
market.

The
whale
exchange
inflows
shooting
up
may
partly
explain
why
the
spot
ETFs
haven’t
proven
as
effective.
Another
factor
behind
the
consolidation
can
be
the
trend
in
the
futures
market.

The
chart
below
shows
that
the
CME’s
future

open
interest
has
recently
been
at
high
levels.

The
trend
in
the
CME
futures
open
interest
over
the
last
few
years
|
Source:

Glassnode’s
The
Week
Onchain
–
Week
24,
2024

The
report
thinks
this
could
signal
that
an
increasing
number
of
traders
have
been
adopting
a
cash-and-carry
arbitrage
strategy.

This
arbitrage
involves
a
market-neutral
position,
coupling
the
purchase
of
a
long
spot
position,
and
the
sale
(short)
of
a
position
in
a
futures
contract
of
the
same
underlying
asset
which
is
trading
at
a
premium.

BTC
Price

Bitcoin
has
swiftly
recovered
more
than
4%
in
the
past
24
hours
as
its
price
is
now
back
above
$69,700.

The
price
of
the
asset
has
moved
sideways
overall
recently
|
Source:

BTCUSD
on
TradingView

Featured
image
from
Dall-E,
Glassnode.com,
chart
from
TradingView.com

Go to Source
Author: Keshav Verma

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