Bitcoin should avoid “regional highs” as institutions flock to U.S. spot Bitcoin exchange-traded funds (ETFs).
In a thread about X on October 30, analyst Mark Cullen warned of potential “ETF FOMO.”
Bitcoin ETF Inflows Receive Mixed Reactions
Institutional investors are pouring hundreds of millions of dollars of net inflows into US spot Bitcoin (BTC) ETFs every day.
The latest data, from sources including UK-based investment firm Farside Investors, tallied nearly $900 million as of October 30 alone. This is the second largest amount ever.
US spot Bitcoin ETF Netflow (screenshot). Source: Farside Investors
But for those who have been in the market for a long time, their success feels like the elephant in the room. ETFs enjoyed similar success last March while Bitcoin was hitting its current all-time high, but institutional enthusiasm ultimately shaped months of BTC price consolidation.
“The last few Bitcoin ETF flows have been ~$900 million and the price has been >70,000, which represents a regional high. “It’s something to think about,” Cullen admitted.
Larger ETF inflows have become synonymous with a bad sign for BTC price performance, but the current trend may be the exception.
“Another day of huge inflows for the Bitcoin ETF, but with little progress in the price, so let’s hope ETF FOMO doesn’t hit a new local high again as it approaches a new ATH,” Cullen said.
US spot Bitcoin ETF flows and BTC/USD chart. Source: Mark Cullen/X
Unlike earlier in the year, the amount of BTC available on the so-called OTC (over-the-counter) desks is large enough to form an ETF buying venue. CryptoQuant said this on-chain analytics platform allows for bulk purchases without impacting the spot price.
The latest weekly report seen by Cointelegraph states that “higher Bitcoin availability on OTC desks means more daily purchases from ETFs, leading to lower inventory ratios.”
“Currently, total daily Bitcoin purchases through ETFs account for 1% to 2% of total Bitcoin balances on OTC desks. This compares to 9% to 12% of total OTC balances in Q1 2024.”
Bitcoin ETF demand as a percentage of OTC balances (screenshot). Source: CryptoQuant
For the status quo to change, ETF demand would need to rise further, CryptoQuant said.
“The bright spot is that overall Bitcoin balances on OTC desks are no longer growing at the rate they were in the second and third quarters of 2024,” he added.
“The 30-day change in total Bitcoin balances on OTC desks is now 3K Bitcoin, down from +77K Bitcoin in August and +92K Bitcoin in June. “Bitcoin price hit record highs in Q1 2024 as OTC desk balance growth remained mostly in negative territory.”
BTC price expected to be discovered
BTC/USD was trading at around $72,000 at the time of writing on October 31, according to data from Cointelegraph Markets Pro and TradingView.
relevant: Bitcoin analyst says BTC price sees ‘scary’ rise with funding pegged at $73,000.
After already hitting all-time highs in various global currencies, including the euro, a BTC price discovery of a return to the US dollar is increasingly seen as just a matter of time.
“All the lawsuits that copied ETFs have now benefited and can shill IBIT to their other lawsuit friends who just watched gold go crazy on price discovery,” said William Clemente, co-founder of cryptocurrency research firm Reflexivity. . To X followers.
Clemente mentioned asset management giant BlackRock’s largest ETF product, iShares Bitcoin Trust (IBIT), whose net inflows totaled $875 million on October 30.
Eric Balchunas, Bloomberg’s dedicated ETF analyst, predicted that ETF providers’ combined BTC holdings will soon surpass 1 million BTC.
IBIT’s assets under management, he added, reached $30 billion in just 293 days, a record time for an ETF product.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.