Will the price of BTC be affected by the recently approved spot Bitcoin ETFs? (CryptoQuant analysis)

Bitcoin (BTC) recently rose above $50,000 for the first time since December 2021 and continues to trend upwards, currently trading above $51,900. Analysts at on-chain intelligence platform CryptoQuant attribute the asset's rise to high demand from recently approved spot Bitcoin exchange-traded funds (ETFs).

According to CryptoQuant's latest weekly report, an estimated 75% of new money invested in BTC comes from ETFs, excluding Grayscale's GBTC.

Bitcoin ETFs are driving BTC’s rise

As new money entered the market, Bitcoin's market cap has reached $1 trillion, with realized capitalization reaching $454 billion, below its April 2022 all-time high of $468 billion.

The increase in realized capitalization signals demand ahead of key catalysts such as the upcoming Bitcoin halving in April, suggesting a medium-term bullish outlook.

It is worth noting that the amount of new money flowing into Bitcoin is growing at the highest annual rate since mid-2022. The realized cap has also increased by $71 billion over the past year, a sign of increasing investment flows and a possible rise in BTC price.

The impact of spot Bitcoin ETFs on BTC demand is evident in the significant portion of new inflows entering the market through the products. Analysts found that $9.5 billion, representing 2% of all money historically invested in Bitcoin, came through the ETFs.

“This is positive for price appreciation as long as current Bitcoin demand from these ETFs continues, but may pose a risk if demand weakens or we begin to see outflows from these ETFs,” CryptoQuant said.

BTC’s short-term price target

As BTC continues its rally, CryptoQuant has set the asset's short-term price target at $56,000 based on network activity assessment. Analysts believe the target level represents the Metcalfe price valuation band, a metric that evaluates the price of BTC based on active user addresses.

The Metcalfe Band signaled a resistance level in April and November 2021 and April 2022, indicating a correction risk around these prices at that time.

Meanwhile, BTC's price may continue to rise as unrealized profit margins are still low, hovering around 17%, compared to 30% to 40% when the ETFs began trading a month ago.

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