Bitcoin spot ETFs in the United States have absorbed $12.3 billion in net inflows since their launch three months ago. How much impact have they had on the broader Bitcoin market?
Glassnode lead analyst James Check on Wednesday provided an analysis measuring the effect of Bitcoin ETFs on the asset's existing futures and spot markets – using on-chain data.
Grayscale and Long Term Holders
The analyst began looking at the Grayscale Bitcoin Trust (GBTC) – the only new Bitcoin ETF that has suffered massive, consistent outflows since January 11.
The fund has lost around 300,000 BTC since then, almost half of its total holdings. However, the growing value of existing BTC on its balance sheet caused its net asset value to only decrease from $28.7 billion to $23.1 billion, leaving much more room for selling pressure from the fund.
“GBTC will be classified as a long-term holder offering,” Check said. Most of the fund's coins are held by older investors who acquired shares at a much lower cost than their competitors, meaning they have more incentive to sell as the price of Bitcoin rises.
“It still works the same way as the long-term holder offering,” he continued. “When we hit an all-time high, people start taking a few chips off the table. This is a trend we've seen in every previous Bitcoin cycle.
Bitcoin ETF: a third of the market
Last month, Glassnode wrote that BTC distribution to long-term Bitcoin holders – defined as those who held their coins for more than five months – had reached levels similar to previous bull runs. The analyst said GBTC now accounts for about a third of all long-term holder spending in recent months.
Looking at other Bitcoin ETFs, Check compared their net inflows to the change in Bitcoin's “realized cap” – an on-chain measure of the volume of capital inflows entering the Bitcoin network. While ETF inflows totaled $28.5 billion, the entire network saw $52 billion in inflows.
In terms of volume, Check said ETFs are, similarly, about 40-50% larger than the traditional Bitcoin spot market. Futures volume still dominates both sectors, averaging 80-85% of Bitcoin trading.
“If we look at it from the perspective of trading volume… long-term holder spending… or ETF inflows… we're talking about something on the order of thirty to fifty percent,” Check concluded regarding the scale of ETFs.
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