Concerns Over Bitcoin Price Decline Amid Large ETF Inflows

Cryptonews Nia Simpson October 24, 2024

Concerns Over Bitcoin Price Decline Amid Large ETF Inflows

Spot Bitcoin ETFs have experienced unusually large inflows in recent days, raising concerns among analysts about a potential decline in Bitcoin’s price, based on historical precedents. While some analysts predict a bearish trend, others indicate that a supply shock could emerge due to the high levels of Bitcoin acquired by these ETFs. Data suggests that Bitcoin’s pricing may rise towards $80,000 by the end of November, as projected by options traders.

The recent surge in inflows to spot Bitcoin exchange-traded funds (ETFs) has raised concerns among financial analysts regarding a potential decline in Bitcoin’s value. According to Shubh Varma, Chief Executive Officer and co-founder of Hyblock Capital, the influx of over $300 million on multiple occasions during the past few days signals a resemblance to past trends where similar patterns preceded bearish market movements. Between October 11 and October 21, spot Bitcoin ETFs experienced a remarkable seven-day inflow totaling approximately $2.68 billion, before witnessing a significant outflow of $79.1 million on October 22. Notably, inflows resumed on October 23, amounting to $192.4 million. Historical data indicates that the last substantial inflow period was accompanied by a decline in Bitcoin’s price approximately three weeks later, where a notable drop of 13% occurred following similar inflows. For instance, on June 4 and 5, further inflow figures of $886.6 million and $488.1 million were documented while Bitcoin traded within the range of $68,800 to $70,000, only for its value to fall to $60,266 by June 25, 20 days later. Despite these concerns, some analysts are suggesting that the current ETF activity could lead to a supply shock in the Bitcoin market. Pentosh1, chief investment officer at North Node Capital, pointed out that the quantity of Bitcoin purchased by the ETFs far exceeds daily mining figures, raising questions about market supply. Market analyst Anup Dhungana echoed similar sentiments by stating that a “supply shock looms large.” In contrast, data from Deribit indicates optimistic projections among Bitcoin options traders, who anticipate that Bitcoin’s price could reach approximately $80,000 by the end of November, coinciding with the upcoming US presidential election.

In recent days, substantial inflows into spot Bitcoin ETFs in the United States have sparked renewed interest and concern within the cryptocurrency community. Analysts have observed a historic pattern whereby large inflows often precede declines in Bitcoin’s price. With the crypto market’s volatility, understanding past behaviors related to ETF inflows and market trends is crucial for predicting future pricing movements. Concurrently, there is a contrasting theory suggesting that these inflows could lead to a market supply shock, intensifying interest in Bitcoin as a commodity amid fluctuating availability.

The significant inflows into spot Bitcoin ETFs have led to a divergence of opinions among analysts, with some predicting a potential decline in Bitcoin’s price based on historical trends, while others propose that a supply shock may be imminent due to high purchasing levels by ETFs. Strategic observations of Bitcoin options traders foresee a bullish trend, potentially reaching new price heights by the end of November. Hence, the market remains cautiously optimistic, but uncertainties persist regarding the future trajectory of Bitcoin’s price amid these unusual inflow activities.

Original Source: cointelegraph.com