- The supply absorption of BTC by spot ETFs has turned negative.
- This indicated a temporary decline in interest in BTC spot ETFs.
The recent decline in Bitcoins [BTC] Supply absorption by spot Bitcoin exchange-traded funds (ETF) suggests a decline in interest in this asset class.
This was stated by the pseudonymous CryptoQuant analyst Oinonen_t in a new report.
The BTC spot ETF market is seeing a slight decline
BTC supply absorption by BTC ETFs tracks the rate at which newly mined coins are acquired or absorbed by these funds.
This metric is important because increased supply uptake by spot ETFs could potentially lead to upward pressure on the price of BTC.
Conversely, lower demand can indicate a possible decline in the value of the leading coin.
Oininen_t noted that the coin's supply absorption recently turned negative, falling to a low of -0.38. The analyst confirmed the above position and said:
“Despite the hype surrounding the upcoming halving in 21 days, Bitcoin’s spot price has not changed dramatically over the past 30 days. One explanation for the stagnating price development is the negative supply absorption of ETFs.”
The analyst added that if spot ETFs cannot absorb the newly mined coins,
“The demand for the approximately 900 Bitcoins issued daily must come from other sources.”
However, in the current market, the retail investors who usually accumulate these coins have turned their attention to meme coins.
In recent weeks, the values of some Solana have increased [SOL]-based meme coins have experienced triple-digit growth, resulting in a significant increase in the market capitalization of meme coins.
Read Bitcoins [BTC] Price prediction 2024-25
According to Oininen_t,
“Although retail investors have shown growing interest in Bitcoin, their focus may be on the new Solana-based tokens and “meme coins.”
The analyst concluded that negative supply absorption was a temporary downside in the spot ETF market:
“The overall picture still looks promising. In a multi-year scenario, I see Bitcoin attempting to reach market cap parity with gold, which would mean a 1000 percent increase from the current spot price.”
Since its launch, the volume of Bitcoin spot ETFs has grown significantly. The daily cumulative volume of this asset category was $182 billion at press time and has increased by over 3,500%.
Source: The Block
With $24 billion in assets under management (AUM), Grayscale Bitcoin Trust (GBTC) currently holds the largest market share in the BTC spot ETF market.
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