Bitcoin stalls below $70K despite $20B ETF inflow
The Bitcoin ETF market recently hit a significant milestone, with total net flows exceeding $20 billion on October 17. Despite this achievement, Bitcoin’s price has struggled to surpass the $70,000 mark, currently hovering around $68,570, according to Cointelegraph data. Analysts believe the impact of these ETF inflows may take several days to manifest fully in the spot Bitcoin price, resulting in a temporary delay in price movements.
The milestone of $20 billion in ETF inflows came just 10 months after the debut of spot Bitcoin ETFs in the United States, a timeline that stands in stark contrast to gold ETFs, which took nearly five years to reach a similar level. The surge in Bitcoin ETF investments was initially expected to provide a boost to Bitcoin prices.
However, despite reaching a three-month high of $69,487 on October 21, Bitcoin has failed to hold that level, raising questions about the underlying market dynamics.
Market Analysis: Delayed Impact of Bitcoin ETF Inflows
According to analysts from Bitfinex, the sluggish price action could be attributed to the time it takes for ETF inflows to influence the spot price of Bitcoin. They noted, “Usually, this means that large ETF inflows have a muted impact for a few days and then the market reverses lower once the aggression from spot market buyers fades.” This suggests that while ETF investments are substantial, they do not immediately translate into upward price momentum for Bitcoin.
This delay in price impact could be partly due to the behavior of traders using ETF inflows as an opportunity for liquidity exits. A market with an “ask-heavy order book” indicates that sellers are taking advantage of ETF demand to offload their positions, potentially capping the price increase. 
Analysts emphasize that sustained interest in the spot market is crucial for breaking out of the current price range.
BlackRock Leads ETF Inflows but Price Impact Remains Limited
During the past week, a notable share of the ETF inflows came from BlackRock’s iShares Bitcoin Trust, which contributed over $1.17 billion. Despite this significant injection, the immediate effect on Bitcoin’s price has been limited, with no sustained rally above the $70,000 threshold. Bitfinex analysts highlighted that even on days when net inflows exceeded $500 million, the upward momentum for Bitcoin remained subdued.
The delayed effect of these inflows is not entirely unexpected, as similar patterns have been observed in other major ETFs. However, the muted response raises concerns about whether these investments alone can drive Bitcoin to a new all-time high or if other factors, such as increased spot market buying, are necessary for a sustained price rally.
Moreover, analysts suggested that a portion of recent ETF inflows might be part of delta-neutral strategies. These strategies involve offsetting positions to minimize market risk, which could further explain the lack of a strong price reaction. Such strategies allow investors to benefit from price volatility without directly impacting the underlying asset’s price.
A Bullish Outlook Remains for Bitcoin
Despite the sluggish price action following the $20 billion ETF milestone, there are signs of potential optimism in the market. Bitcoin managed a positive weekly close above $69,000, a level that could act as a psychological support. A prominent crypto analyst, Rekt Capital, remarked that this price behavior might set up Bitcoin for a possible rally above $71,000, a range it hasn’t seen since June 2024.
Additionally, the approval of the first Bitcoin ETF options by the United States Securities and Exchange Commission (SEC) on October 18 may add another layer of market interest. The availability of options could attract a broader range of investors, potentially driving further inflows into Bitcoin ETFs and, eventually, impacting the spot price.
Looking back, the initial launch of Bitcoin ETFs in the U.S. saw rapid growth in investor interest, with ETFs accounting for approximately 75% of new investment into Bitcoin by mid-February 2024. This trend suggests that ETF products remain a popular choice for institutional investors, even if their impact on spot prices is not immediate.
Challenges and Opportunities Ahead
The current state of the Bitcoin market reflects a delicate balance between bullish sentiment and cautious trading. While ETF inflows have reached impressive levels, their capacity to propel Bitcoin above key psychological barriers like $70,000 remains in question. The need for sustained buying pressure from the spot market could determine whether Bitcoin continues to trade sideways or breaks into new highs.
Yet, the presence of substantial ETF inflows signals underlying demand for Bitcoin from institutional investors, which could lay the foundation for future growth. Analysts suggest that if spot market activity picks up, particularly in response to further positive news or regulatory developments, the price of Bitcoin could see a more significant upside.
As market participants monitor these dynamics, the performance of prominent ETFs like those from BlackRock and Fidelity will continue to be key indicators of institutional sentiment. The question remains whether these funds will provide the momentum needed for Bitcoin to test new highs or if the market will see a prolonged period of consolidation below the $70,000 mark.
This detailed analysis covers the recent developments in the Bitcoin ETF space and their implications for the broader market. While the focus remains on the potential for price appreciation, the delayed impact of inflows and market structure are crucial factors to watch in the weeks ahead. Bitcoin’s future trajectory may depend not only on ETF investments but also on the underlying strength of the spot market and broader economic conditions.
Reference
https://cointelegraph.com/news/bitcoin-stalls-below-70k-despite-20-b-etf-milestone
