tl;dr
Billions have been invested in spot Bitcoin exchange-traded funds (ETFs) following the SEC's approval, but on-chain analysis suggests that some investors may be less experienced than initially thought. Willy Woo, an on-chain analyst, shared data indicating that some spot Bitcoin ETFs are shaken out ...
Billions have been invested in spot Bitcoin exchange-traded funds (ETFs) following the SEC's approval, but on-chain analysis suggests that some investors may be less experienced than initially thought. Willy Woo, an on-chain analyst, shared data indicating that some spot Bitcoin ETFs are shaken out too quickly by the market. This suggests that some investors are choosing to redeem and hold the underlying coin, rather than allowing the issuer to control their private keys. CoinDesk's report also suggested that early spot Bitcoin ETF demand was likely driven by retailers, with the average trade size for one ETF hovering around $13,000. Currently, there is no fresh capital going into spot Bitcoin ETFs, and Grayscale and other issuers have reduced over $700 million from their holdings.
Billions have been channeled to spot Bitcoin exchange-traded funds (ETFs) after the United States Securities and Exchange Commission (SEC) gave the green light in mid-January. However, on-chain analysis indicates that some of these spot ETF investors might, after all, be less experienced than initially assumed. Taking to X, Willy Woo, an on-chain analyst, shared the Bitcoin Network Flows data and picked out crucial leads to suggest that some spot Bitcoin ETFs are shaken out too quickly by the market. In a post, Woo pointed to a $1.6 billion outflow from spot Bitcoin ETFs when prices crashed on March 5. During this dip, the network had inflows worth $1.1 billion. Spot Bitcoin ETFs offer a simple and accessible route to Bitcoin investment. Unlike futures-based ETFs, which speculate on future prices, spot Bitcoin ETFs track the price of Bitcoin directly. This means investors can gain exposure to Bitcoin without the complexities of buying and holding the coins themselves.
However, as on-chain data shows, by redeeming their shares when prices fell, investors choose to self-custody their coins instead of allowing the issuer, through its partners, to control their coin’s private keys. The apparent shakeout and inflow directly into the mainnet as Woo shares appear to confirm previous studies. In a report, CoinDesk noted that a big chunk of early spot Bitcoin ETF demand was likely driven by retailers. Their investigation found that the average trade size for one ETF hovered around $13,000. Even so, the actual purchasers of spot Bitcoin ETFs will be confirmed when made public. For now, there is no fresh capital going into spot Bitcoin ETFs. According to Lookonchain data on March 21, Grayscale and the other issuers reduced over $700 million from their holdings. CoinMarketCap data shows that BTC remains below $70,000 and is under pressure.
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