There is a demand shock in the Bitcoin market: ETFs suck up 9,000 BTC from the market every day, while miners mine only 450.
U.S. spot Bitcoin ETFs trade a lot more Bitcoins on a daily basis they attract out of the market than miners can produce. On Tuesday, November 19, for example, these exchange-traded funds accumulated nearly 9,000 BTC. This meant a total of about 814 million dollars inflow to the market, according to data from Coinglass.
A major market shock is on the horizon
While only 450 BTC are mined per day, spot Bitcoin ETFs are buying up Bitcoin from the market at an incredible rate. If this trend continues, there could be a huge gap between the available Bitcoin supply and customer demand. This is especially true due to the effect of the halving in April 2024. The halving reduced the reward for miners and, as was likely in previous cycles, is now creating another price bubble in the Bitcoin market. The difference is that before Bitcoins were not bought up from the market at such a rate as they are now.
Institutional investors are driving up the Bitcoin price
This week, more than $1 billion has flowed into spot Bitcoin ETFs in just two days. Tuesday was particularly outstanding, with Ark 21Shares, Fidelity and BlackRock funds recording inflows of $267.3 million, $256.1 million and $213.5 million, respectively.
Bitwise, Grayscale and VanEck ETFs saw smaller inflows but were still positive at the end of the day. This marks the second straight day of no outflows from any Bitcoin ETF. Since the ETFs launched in January 2024, a total of $28.5 billion has flowed into these products.
This massive demand shows that the main driver of the current Bitcoin price rise is coming from institutional investors. On the other hand, the participation of retail investors is still pending.
The appearance of IBIT options adds a new dimension
A BlackRock iShares Bitcoin Trust (IBIT) options its launch on Tuesday also gave the market a significant boost. On the first day, nearly $2 billion in nominal value was traded in these options, contributing to Bitcoin’s latest all-time high, pushing the price of that BTC above $97,000.
According to Nate Geraci, president of the ETF Store, the introduction of options opens up a new dimension in the market, as it makes entry into cryptocurrency easier and more attractive for institutional investors. Availability of US spot Bitcoin ETF options has been limited until now, but they are now available in the world’s largest liquidity market, which could further boost BTC if the current pace of demand continues.