At the Current Pace, Spot Bitcoin ETFs Are on Course To Buy Up Almost 2 Million BTC This Year!

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A lot has been written on the impact that the launch of spot Bitcoin ETFs in the US will unleash on the world’s preeminent cryptocurrency. Some think that these investment vehicles will make Bitcoin more volatile, dancing to the ever-changing tune of the market. Others believe that these spot ETFs will play an important role in soaking up the available BTC supply, ushering in a fundamental repricing of the world’s largest cryptocurrency by market capitalization. Based on the initial trends, the latter hypothesis appears closer to reality.

As we noted in a dedicated post at the time, Bitcoin responded spectacularly to the launch of spot ETFs, at least initially, with the apex cryptocurrency quickly tagging the $49,000 price level. However, by the next day, Bitcoin was trading at around the $41,000 price level. Many theories have been put forward to explain this confounding weakness. Some pointed to the veritable flood of redemptions emanating from Grayscale Bitcoin Trust (GBTC) spot ETF now that its unit holders are no longer bogged down by the trust’s outflow barriers. There is some truth to this thesis. After all, the GBTC spot Bitcoin ETF experienced an outflow of $579 million over the first two trading sessions. Others laid the blame squarely on South Korean and Asian traders, who’ve been buying up BTC aggressively over the past few months in anticipation of the launch of spot Bitcoin ETFs and might now have dabbled in some profit-taking activity. Of course, a combination of these two factors might have played an important role in ushering in this initial bout of weakness.

This brings us to the crux of the matter. As per initial estimates, spot Bitcoin ETFs collectively attracted around $1.4 billion in inflows over their first two trading sessions. After subtracting Grayscale’s outflows, we get a net inflow figure of around $819 million, or a little over $400 million per day. Now, Alistair Milne, the CIO of Altana Digital Currency Fund, is out with his take that the current level of activity is not currently priced in vis-a-vis Bitcoin’s bullish thesis.

Gabor Gurbacs, an advisor at Tether and VanEck, then added color to this observation by noting that at the current net inflow level of around $300 million per day, spot Bitcoin ETFs in the US would be effectively buying up around 7,000 BTC per day! For comparison, only around 900 BTC are mined every day.

Should this level of activity persist, these ETFs are on course to buy nearly 2 million BTC (1.76 million, to be specific) over 252 trading days.

Meanwhile, according to André Dragosch, the head of Research at ETC Group, last week marked the highest-ever inflow level into crypto ETPs. As per Dragosch’s previous study, a 1 percent increase in the Assets Under Management (AUM) of various Bitcoin-related Exchange-Traded Products (ETPs) on a week-to-week basis has pumped up the weekly price of Bitcoin by an average of 8.7 percent.

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