How Do ETFs Influence the Price of Bitcoin? Explanations!

Bitcoin, this crypto star, dips below the $60,000 mark. This rollback is explained by a combination of factors, ranging from macroeconomic uncertainty to ETF fund fluctuations. A key element of this dynamic is the behavior of Bitcoin ETFs, particularly the German fund ETC Group Physical Bitcoin (BTCE), which continues to liquidate its positions despite market volatility.

The paradox of Bitcoin ETFs and market volatility

Since the introduction of Bitcoin ETFs, which oddly occasioned a drop in Bitcoin on the day of their launch, investors have observed a strong correlation between the movements of the BTCE fund and the price of BTC. But according to Joao Wedson, this alignment seems to be faltering lately.

The fund, which has seen its reserves drop from nearly 28,000 to 17,000 BTC since January 2024, continues to sell while Bitcoin has slightly rebounded.

This paradox is intriguing. In other words, the theory that a decrease in ETF reserves always results in a drop in cryptocurrency price seems to be wavering:

« The exception is the most recent movement, where Bitcoin increased while the fund was liquidating its positions. »

Investors must therefore keep a vigilant eye on this new dynamic to understand whether it heralds a lasting change or a mere anomaly.

Massive adoption of Bitcoin despite uncertainties

In this context of volatility, institutional demand for Bitcoin is not weakening. While retail investors seem to panic, heavyweights like Goldman Sachs and Blackrock are strengthening their positions.

In fact, in just 5 days, Blackrock ETF acquired more than 5,000 BTC, and the enthusiasm for crypto doesn’t stop there:

• 1 million BTC acquired by spot ETFs; 
• $500 million held by Goldman Sachs.

The numbers don’t lie, and this illustrates the confidence of institutions in the long-term value of Bitcoin, even in a turbulent market. Paradoxically, this massive adoption could even fuel volatility, creating a cycle where each market movement becomes both an opportunity and a threat.

Other factors also weigh on cryptos every week. The volatility of cryptocurrencies, including Bitcoin, will depend on these events to closely watch.