30s Summary

Institutional investors’ investment in Bitcoin’s exchange-traded funds (ETFs) in the US is causing concerns about a potential market peak, or local top. On Oct. 30, nearly $900 million of cash reportedly flowed into US Bitcoin ETFs, marking the second highest day ever. The massive influx resembles the situation earlier this year when record-high Bitcoin prices triggered similarly significant ETF investments, eventually stalling Bitcoin’s price growth. Analyst Mark Cullen has warned about a possible recurrence, but notes there is sufficient crypto supply on over-the-counter markets to mitigate potential impacts on Bitcoin’s spot price.

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Bitcoin (BTC) needs to avoid creating a peak, or “local top”, in the market as loads of financial bigwigs are jumping aboard the Bitcoin exchange-traded funds (ETFs) train in the United States.

In a thread on X on Oct. 30, well-known analyst Mark Cullen gave a heads up on the potential for “ETF FOMO”, or fear of missing out.

The investment from these institutional players is causing a huge influx of cash into the US Bitcoin ETFs every day.

According to recent data, including from UK-based Farside Investors, the count for Oct. 30 alone was close to a whopping $900 million – this is its second highest day ever.

But for those who’ve been in the market for a while, this success seems a bit troubling. They’ve seen this before – earlier this year, when Bitcoin’s price soared to record highs, ETFs experienced similar success. However, the enthusiasm from these institutions eventually led to a sort of standstill in Bitcoin’s price for a few months.

Mark Cullen noted, “The last couple of times Bitcoin ETF were attracting around $900 million and the price was over 70k, it pointed to a local top. Just something to consider.”

A surge in ETF cash flow usually means bad news for Bitcoin’s price performance, but there’s still a chance this might not be the case this time.

Cullen also said, “There was another huge cash influx for Bitcoin ETFs recently, but Bitcoin’s price didn’t really make any significant leaps. Let’s hope this ETF FOMO doesn’t trigger another local top, especially now that we’re so close to a creating a new record high.”

Unlike before, now there are enough Bitcoins available in over-the-counter (OTC) markets for ETFs to buy up a large amount without it affecting the spot price.

CryptoQuant explains in a recent weekly report, “More Bitcoin available on OTC markets means daily purchases from ETFs add up to a smaller share of the total supply.”

As of now, daily Bitcoin purchases from ETFs only take up around 1% to 2% of the total Bitcoin on OTC markets. In contrast, they accounted for a hefty 9% to 12% of the total balances back in Q1 2024.

For things to change, ETF demand would need to go through the roof.

Luckily, the total Bitcoin in OTC markets isn’t growing as quickly as it was earlier in 2024.

At the time of writing on Oct. 31, Bitcoin (BTC) was being traded around $72,000. This currency has already hit new record highs in several parts of the world including Europe, and a similar trend might soon be seen in the US.

William Clemente, co-founder of crypto research firm Reflexivity, said to X followers, “The dudes who jumped on the ETF bandwagon are now making a profit and must be talking up Bitcoin to their friends, especially after watching gold prices skyrocket recently.”

The biggest ETF product currently is the iShares Bitcoin Trust (IBIT), from BlackRock. On Oct. 30, they received a net inflow of $875 million.

Eric Balchunas, a hardcore ETF analyst from Bloomberg, predicted that the combined Bitcoin holdings of ETF providers will soon surpass 1 million Bitcoin.

The iShares Bitcoin Trust, reaching $30 billion in assets under management, Balchunas mentioned on X, achieved this in record time for an ETF product — just under a year, or more accurately, 293 days.

Just a heads up – this article isn’t giving you financial advice. It’s just talking about the current situation. Every investment you make is risky, and you should do your own research before making a decision.

Source: Cointelegraph