How Important Are Bitcoin ETFs Really?
Since their start three months ago, Bitcoin spot ETFs in the US have taken in a net of $12.3 billion. What effect did they have on the Bitcoin market as a whole?
On Wednesday, James Check, the lead analyst at Glassnode, used on-chain data to look at how Bitcoin ETFs affect the futures and spot markets for the asset.
The expert began by looking at the Grayscale Bitcoin Trust (GBTC), which is the only new Bitcoin ETF that has seen huge, steady losses since January 11.
Since then, the fund has lost about 300,000 BTC, which is almost half of what it had in it. But because the value of the BTC it already had went up, its net asset value only went down from $28.7 billion to $23.1 billion. This meant that the fund had a lot more room to sell.
Check said, "GBTC will be named a long-term holder offering." Most of the fund's coins are owned by older investors who bought shares when they were much cheaper than other investors. This gives them a stronger reason to sell as Bitcoin's price rises.
"It still works the same as the long-term holder offering," he said. "People start to take some chips off the table when we reach an all-time high. We have seen this trend in every Bitcoin run before this one.
A THIRD OF THE MARKET IN BITCOIN ETF
As of last month, Glassnode wrote that the amount of BTC given to long-term Bitcoin holders (those who had their coins for more than five months) had hit levels similar to those seen during previous bull runs. The expert said that about a third of all long-term holder spending in the past few months has been on GBTC.
Compare the net outflows of other Bitcoin ETFs to the change in Bitcoin's "realised cap." The "realised cap" is an on-chain measure of the amount of money coming into the Bitcoin network. The total amount of money coming into the network from ETFs was $28.5 billion.
Check said that ETFs are also about 40–50% bigger than the regular Bitcoin spot market in terms of volume. Futures trading still makes up the majority of both areas; on average, 80–85% of all Bitcoin trading is in futures.
"If we look at it from the point of view of trading volume, long-term holder spending, or ETF inflows, we're talking about about thirty to fifty percent," Check said about the size of ETFs.