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BTC spot ETF demand proves Bitcoin is a macro asset

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Bitcoin Weekly Range Breakout Signals Potential Upsurge Analyst
Bitcoin Weekly Range Breakout Signals Potential Upsurge Analyst

The key takeaways

  • Avenir Group’s and Glassnode’s data show that the majority of BTC spot ETF flows are long-only, unhedged positions. These indicate a genuine institution’s conviction, rather than an reliance on arbitrage short-term strategies.

  • BTC behaves like a macro-asset with strong correlations between equities and gold, and the liquidity cycle, and tracks inversely both dollar spreads and high yield credit spreads.

The new study shows that Bitcoin is a major part of the spot market.BTCETF inflows aren’t driven by arbitrage, or by hedged futures, but long-term unhedged demands from traditional markets. It is only a layer of an even more profound change underway.

The following are some of the ways to get in touch with each other collaborative report Glassnode Group and Avenir Group stated that although the launch of US Spot Bitcoin ETFs was a major milestone in the crypto industry, there were questions as to whether or not the capital influx was genuine.

Unhedged Demand for Bitcoin ETF. Source: Glassnode/ Avenir Group

The assumption was that ETF holdings would perfectly cover all short CME Bitcoin futures positions from dealers, asset managers and hedge funds. A new framework has been developed to answer this question.

Avenir Group’s Helena Lam, Glassnode’s UkuriaOC analysts and CryptoVizArt analyst UkuriaOC said data revealed a strong correlation in unhedged demands and arbitrage activities despite the strict model they use to filter out such activity. spot Bitcoin ETF inflows. The capital inflows indicate that many institutional investors have not only been testing the market. They are also committing to ETFs with confidence.

Analysts said the steadily rising spot ETFs are a sign of a change in Bitcoin’s market profile. Bitcoin is being increasingly treated as an institution asset. This change brings about more stable capital as well as improved liquidity and signs of an maturing market.

Related: Bitcoin hashrate down ~15% since June 15, steepest drop in 3 years

Bitcoin’s identity crises is now over

The study found that Bitcoin’s performance is closely linked to the broader economic conditions. Data shows growing positive correlations with traditional risk-on assets such as the S&P 500, Nasdaq and gold, while inversely tracking the US Dollar Index and credit stress indicators like high-yield spreads.

Cryptocurrencies, Dollar, Bitcoin Price, Markets, Bitcoin ETF
Bitcoin’s correlation to assets and macro indicators Source: Glassnode/Avenir Group

Bitcoins’ response to Global Liquidity Index(GLI) also highlights the shift, as Bitcoins rally during times of expanding liquidity but falter when financial conditions tighten.

Supporting this evolving trend, André Dragosch, the head of research at Bitwise Europe, highlighted Bitcoin and global money supply are linked.

Analysts caution against short-term forecasts based on global liquidity. “statistical evidence suggests a long-run relationship,” According to estimates, every increase of 1 trillion dollars in the world’s money supply can translate into an $13,861 price rise for Bitcoin. 

Related: Anthony Pompliano’s crypto venture buys $386M in Bitcoin

The article is not intended to provide investment advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making any kind of trading or investing decisions.