Bitcoin ETFs have helped push BTC to unprecedented heights this year, but analysts differ on how these investment vehicles could determine Bitcoin’s next direction.
all Bitcoin ETFs are products that trade like stocks on traditional exchanges and allow individual investors to gain exposure to BTC without having to purchase and store the assets themselves. The launch of Bitcoin ETFs in the U.S. market, which the SEC rejected for more than a decade, has brought tens of billions of dollars into the cryptocurrency market since January.
Nonetheless, it is not as game-changing a factor in Bitcoin’s price trajectory as many people think, according to Glassnode senior analyst James Check.
In a video presentation on Monday, the analyst reviewed key indicators related to Bitcoin’s cyclical price movements and compared them to today’s price for the asset. He also reviewed other historical catalysts for BTC demand, which according to on-chain data were quite similar to those driven by ETFs.
“These ETFs are not that new,” he said. “In 2019, there was a PlusToken Ponzi scheme in China, which absorbed about 2% of the Bitcoin supply in about 3-4 months. In 2021, that is the case. GBTC has 650,000 bits in 4 months. I vacuumed the coin.”
By comparison, nine newly launched Bitcoin ETFs have absorbed approximately 508,000 BTC since their launch in January. When you include: grayscale Bitcoin Trust’s (GBTC) 10 spot Bitcoin ETFs together hold more than 800,000 coins.
An analyst who pierces the belief that the cryptocurrency market is in the throes of a “supercycle” has highlighted how today’s on-chain investor behavior is similar to when Bitcoin prices surged during past bull markets.
For example, investors’ net realized gains and losses surged in both 2019 and 2021, a sign that long-term holders are cashing in on dormant, cheaply purchased coins, he said. The past few months have seen the same phenomenon, this time with massive outflows from GBTC, where investors have been holding Bitcoin for years.
“We’ve actually seen this happen multiple times, at different stages, with slightly different characteristics. These are all mechanisms we’ve seen before,” Check argued.
However, comparisons with previous cycles depend on the measuring stick used. While the pattern of on-chain monetization may seem familiar among long-term investors, the power of accumulation among Bitcoin’s most die-hard HODLers certainly is not.
“So far this year, we have seen unprecedented growth in demand for Bitcoin,” said Julio Moreno, head of research at CryptoQuant. decryption.
He explained, “The Bitcoin balances of large investors are growing at an all-time high compared to the previous year, predicting strong investor demand.” Moreover, permanent Bitcoin holders, which are addresses that have bought BTC but never sold it, have absorbed approximately 200,000 BTC per month since the ETF launched, compared to only approximately 40,000 BTC before the ETF was launched.
“All of this means that the demand for Bitcoin has never been seen before, much greater than in any other period,” Moreno concluded.
Glassnode’s Check previously characterized the current Bitcoin bull market as one of the “strongest” in history and predicted that Bitcoin could reach $250,000 before the end of 2025.
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The views and opinions expressed by the author are for information purposes only and do not constitute financial, investment or other advice.
