Founder of CryptoQuant, Ki Young Ju, has voiced concerns over the surge of investments in spot Bitcoin Exchange-Traded Funds (ETFs). His alarm is raised in response to the consistent influx of capital, with the value of entries in these funds surging past $10 billion—a milestone since their January inception.
Impending Liquidity Squeeze in the Bitcoin Market
Ju underscores the precarious nature of the rising investments in spot Bitcoin ETFs. He stresses that unless the flow of entries ceases, the market could face a sell-side liquidity crisis. Recent figures reveal that over 30,000 BTC poured into spot Bitcoin ETFs last week. This accumulation is compounded by large institutions, including exchanges and miners, holding roughly three million BTC, over half of which are in US entities.
The swell of investments in Bitcoin ETFs has market analysts apprehensive about a potential liquidity crunch. Ju predicts that the resultant impact on Bitcoin’s price could be more severe than anticipated. He foresees the sell-side liquidity crisis peaking in a manner that surpasses current forecasts, citing the combination of scarce liquidity and a fragile order book.
Bitcoin’s Growth Spurred by ETF Entrants
Looking at the trends, Ju observes a notable rise in BTC amounts held in “accumulation wallet addresses” and suggests that a sell-side crisis could manifest within the next six months. The US market has seen a marked uptick in strong investments in spot Bitcoin ETF products. On March 12th, these investments crossed the $1 billion threshold, setting a new record.
Meanwhile, Bitcoin’s value continues to reach unprecedented heights, driven by the significant interest in spot ETFs. Following a recent price high of $73,311, Bitcoin maintains its upward trajectory, currently trading at $73,275, marking a 2% increase in the past day.
