The introduction of U.S. Bitcoin spot ETFs has seen a significant influx of $12.3 billion in net inflows within just three months. This surge has left many wondering about the impact these ETFs have had on the broader Bitcoin market.
Glassnode analyst James Check delved into this question by analyzing the effect of Bitcoin ETFs alongside the asset’s existing futures and spot markets using on-chain data. He specifically looked at the Grayscale Bitcoin Trust (GBTC), which has experienced substantial and consistent outflows since January 11, resulting in a loss of around 300,000 BTC, nearly half of its total holdings. Despite this, the increasing value of the existing BTC on its balance sheet has caused its net asset value to decrease only from $28.7 billion to $23.1 billion, leaving room for more sell-side pressure from the fund.
Check noted that GBTC is classified as long-term holder supply, as most of the coins within the fund are held by older investors who acquired shares at a lower cost basis. This leads to a greater incentive to sell as the price of Bitcoin rises. The analyst emphasized that this supply dynamics mirror those of long-term holders, who tend to take profits when Bitcoin reaches all-time highs, a pattern observed in previous Bitcoin cycles.
Glassnode’s previous report highlighted that the distribution of BTC from long-term Bitcoin holders, defined as those holding coins for more than five months, had escalated to levels seen in previous bull runs. GBTC now makes up approximately one-third of all long-term holder spending in recent months.
Check compared the net inflows of other Bitcoin ETFs to the change in Bitcoin’s “realized cap,” which measures the total capital inflows into the Bitcoin network. Despite ETF inflows totaling $28.5 billion, the entire network recorded $52 billion in capital inflows. On a volume basis, the ETFs represent around 40% to 50% of the traditional Bitcoin spot market, with futures volume still dominating both sectors, accounting for 80% to 85% of Bitcoin trading on average.
In concluding his analysis, Check pointed out that from the perspectives of trade volume, long-term holder spending, and ETF inflows, the impact of the ETFs is estimated to be between thirty and fifty percent. This suggests that while ETFs have undoubtedly made their presence felt in the Bitcoin market, they are still a significant distance from overtaking the traditional trading volumes seen in the futures and spot markets.