Key Points
- Bitcoin has been experiencing sell-offs right before and during the U.S. market open, impacting Bitcoin ETFs.
- Bitcoin’s transaction volume surpassed Visa and Mastercard combined in 2023, but ETF holders miss out on this growth.
Bitcoin’s recent pattern of selling off before and during the U.S. market open is puzzling traders and analysts.
The leading cryptocurrency, Bitcoin (BTC), tends to pump prices to shake out shorts, followed by a decline to shake out longs, before the real market move happens.
Driving Factors
Several factors may be driving this pattern, including pre-market trading, market sentiment, supply and demand dynamics, and the trading behavior of institutional investors.
This trend has notably affected Bitcoin ETFs in the U.S.
Since the launch of these ETFs, Bitcoin’s cumulative dollar return shows a distinct pattern: it tends to fall when the NYSE is open and rise when the NYSE is closed.
Bitcoin ETFs and Trading Volume
Bitcoin ETFs recorded $65 million in daily net inflows yesterday, marking the sixth consecutive day of inflows.
This trend highlighted an increase in both net flow and daily trading volumes, with total net assets now reaching $55.13B.
For instance, the BlackRock spot Bitcoin ETF ($IBIT) recently recorded a trading volume of $758 million, contributing to a total daily volume of $1.4 billion for ETFs.
This surge in trading activity has supported Bitcoin’s price, allowing it to retest key levels.
In 2023, Bitcoin’s transaction volume remained robust, with the network processing $36.6 trillion, surpassing both Visa and Mastercard combined.
However, ETF holders miss out on this direct participation in Bitcoin’s transactional growth, as their holdings are tied to custodians and represented by paper shares.
This limitation in ETF structures needs addressing, but it doesn’t diminish Bitcoin’s long-term prospects.
Bitcoin continues to outperform traditional stocks in year-to-date returns, with a 34% gain compared to NASDAQ’s 20%.
The ongoing recovery in crypto markets suggests that Bitcoin’s future gains could be substantial, especially if more bullish drivers emerge.
Despite a relatively quiet year, the early boost from the ETF launch and the potential for further market catalysts indicate that Bitcoin’s price could rise significantly in the near future.
