Bitcoin ETFs Influence 30-50% of Bitcoin Spot Market, On-Chain Data Reveals

April 10, 2024 BACK TO NEWS

As Bitcoin exchange-traded funds (ETFs) continue to gain traction, on-chain data indicates a significant impact on the Bitcoin spot market, with ETFs now comprising between 30% and 50% of the market.

U.S. Bitcoin spot ETFs have witnessed remarkable growth, attracting $12.3 billion in net inflows since their launch three months ago. Glassnode analyst James Check delved into the influence of these ETFs on the broader Bitcoin market, using on-chain data for analysis.

Grayscale Bitcoin Trust (GBTC) and Long-Term Holders

Check's analysis began with Grayscale Bitcoin Trust (GBTC), which has experienced substantial outflows since January 11, shedding approximately 300,000 BTC, nearly half of its total holdings. Despite this, the rising value of the remaining BTC on its balance sheet has kept its net asset value relatively stable. Check noted that GBTC is classified as long-term holder supply, with many coins held by older investors who acquired shares at lower cost bases, leading to sell-side pressure as Bitcoin's price rises.

Bitcoin ETFs: One-Third of the Market

Glassnode's previous analysis revealed that BTC distribution from long-term holders has increased, with GBTC now constituting approximately one-third of all long-term holder spending in recent months. Comparing ETF net inflows to Bitcoin's realized cap, Check found that while ETF inflows reached $28.5 billion, the entire network recorded $52 billion in capital inflows. Additionally, ETFs account for 40-50% of the traditional Bitcoin spot market on a volume basis, with futures volume dominating both sectors at 80-85%.

Implications for the Bitcoin Market

The data suggests that Bitcoin ETFs wield considerable influence in the market, with their share ranging from 30% to 50%. As institutional and retail interest in Bitcoin ETFs continues to grow, their impact on Bitcoin's price dynamics and market structure is likely to become more pronounced.

With Bitcoin ETFs becoming increasingly integrated into the cryptocurrency ecosystem, stakeholders will closely monitor their influence on market trends and investor sentiment, shaping the future trajectory of the digital asset landscape.