The introduction of Bitcoin spot ETFs in the U.S. has been met with significant interest, with $12.3 billion of net inflows recorded in just three months. This influx of investment has raised questions about the impact of these ETFs on the broader Bitcoin market. Glassnode analyst, James Check, recently provided insights by analyzing the effects of Bitcoin ETFs alongside the existing futures and spot markets using on-chain data.
One ETF that has been closely scrutinized is the Grayscale Bitcoin Trust (GBTC), which has experienced substantial outflows since January 11. Despite losing approximately 300,000 BTC, or nearly half of its total holdings, the fund’s net asset value has only decreased from $28.7 billion to $23.1 billion due to the rising value of its remaining BTC. Check highlighted that GBTC is seen as long-term holder supply, as many coins in the fund are held by older investors who acquired shares at lower prices. This group may be more inclined to sell as Bitcoin’s price increases, a trend observed in previous Bitcoin cycles.
Glassnode’s previous analysis revealed that the distribution of BTC from long-term holders, defined as those holding coins for more than five months, has reached levels comparable to previous bull markets. GBTC now represents around a third of all long-term holder spending in recent months, indicating its significance in the market.
Check compared the net inflows of Bitcoin ETFs with the change in the cryptocurrency’s “realized cap,” a measure of capital inflows into the Bitcoin network. While ETF inflows totaled $28.5 billion, the network saw $52 billion of capital inflows. In terms of volume, ETFs represent 40% to 50% of the traditional Bitcoin spot market, with futures trading dominating both sectors at 80% to 85%.
Conclusion on ETF Magnitude
In concluding the analysis, Check emphasized that ETFs account for approximately 30% to 50% of trade volume, long-term holder spending, and capital inflows into the Bitcoin network. While the ETFs have made a significant impact on the market, traditional spot and futures markets still hold the majority share of Bitcoin trading activity.
The introduction of U.S. Bitcoin spot ETFs has brought substantial investment into the market, impacting various aspects of Bitcoin trading. As these ETFs continue to evolve and attract more investors, their influence on the overall market dynamics is likely to grow in the future.
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