Bitcoin Experiences Major Correction Despite Rising Spot ETF Net Inflows
Bitcoin is currently undergoing a significant correction despite the increasing net inflows into Bitcoin spot ETFs. In a recent post on X, an analyst shared his insights into the recent Bitcoin price decline, shedding light on the ongoing sell-off and why its price does not correlate with the positive dynamics of BTC ETFs.
Who is Selling?
The analyst points out that while ETFs and institutional investors are actively purchasing Bitcoin, focusing solely on ETF inflows is flawed. The primary sellers, according to him, are the “OGs” – the original BTC holders. These early adopters possess significantly more Bitcoin than all the ETFs combined and tend to sell during each bull market. A recognizable pattern emerges on the chart, showing these sales during bullish periods in each cycle.
The Impact of Paper BTC:
The introduction of paper BTC through futures markets since 2017 has dramatically altered market dynamics. Paper BTC allows traders to buy synthetic BTC without holding the actual asset, diverting direct demand away from real BTC.
Read more Bitcoin Price Analysis: June 14, 2024
Historically, Bitcoin’s price increased primarily due to sales by long-term holders and miners. However, the bear market in 2022 was influenced by a flood of paper BTC, despite minimal selling by spot holders. The analyst highlights that current conditions reveal periods where increases in paper Bitcoin do not lead to price hikes, emphasizing the impact of synthetic Bitcoin.
Understanding BTC market dynamics, he argues, requires analyzing on-chain data, derivatives data, and technical price movements. Therefore, focusing solely on ETF purchases is insufficient; a broader perspective is necessary to capture the complete picture of supply and demand.
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