Despite a remarkable 19-day streak of inflows into spot Bitcoin exchange-traded funds (ETFs) in the United States, observers are puzzled as to why the price of Bitcoin has not surpassed its record high of $73,679 set in March. Analysts claim to have the explanation.
As of June 6, spot Bitcoin (BTC) ETFs globally held approximately 1.3 million Bitcoin, representing 5.2% of the circulating supply of BTC, with a significant portion held by U.S.-based ETFs, as reported by HODL15Capital.
Nevertheless, analysts argue that various other factors affect the price and that the influence of the ETFs is not significant enough.
“ETF inflows are impressive, but they are not yet powerful enough to overcome the selling pressure from the entire ecosystem,” stated Charles Edwards, the founder of Capriole Investments, in an interview with Cointelegraph.
“It’s important to understand that the market consists of spot, futures, ETFs, and options. The price of Bitcoin at any given moment is a result of all these factors, not just one of them,” noted crypto trader Christopher Inks in a post on June 7.
Radar Bear, co-founder of a cryptocurrency exchange, explained to Cointelegraph that while ETFs play a role, the price of BTC is more significantly influenced by macroeconomic conditions and geopolitical events.
Bitcoin ETFs may need to expand into more markets before making a substantial impact. According to Farside data, net inflows into Bitcoin ETFs on June 6 amounted to $217.7 million.
Since their introduction, spot Bitcoin ETFs have attracted over $15.5 billion in inflows. However, some traders believe that this amount is still insufficient to have a substantial effect on prices until ETFs are available in more markets.
“There are still no spot Bitcoin ETFs in key markets like the U.K. or Japan. There is plenty of room for growth,” remarked Timothy Peterson, founder of Cane Island Alternative Advisors, to Cointelegraph.
Following the approval of spot Bitcoin ETFs on January 10, Bitcoin surged by nearly 53%, reaching all-time highs of $73,679 by March 13. However, in the subsequent three months, it has failed to experience further growth, trading mainly within the range of its peak and the $60,000 support level.
One significant factor affecting price movement is the activity of long-term holders. Edwards highlighted that for a substantial price increase to occur, confirmation of one of three major factors is necessary: “Higher average ETF buying, reduced selling by long-term holders, or an increase in U.S. or global liquidity.”
Edwards emphasized the impact of selling by long-term holders, noting that those who have held Bitcoin for over two years have been selling more frequently in 2024. This group’s share of the total Bitcoin supply has decreased slightly to 54% over the past six months, which has a more significant impact than it may seem.
Additionally, Edwards pointed out that the effects of the Bitcoin halving have not yet materialized.
This article does not provide investment advice. All investment and trading decisions involve risks, and readers are advised to conduct their own research before making any decisions.