TL;DR
- Ki Young Ju, CEO of CryptoQuant, warns of a possible “sell-side liquidity crisis” by September if institutional flows into Bitcoin ETFs continue.
- Despite the currently accumulated $30 billion in BTC ETFs, Ki raises the possibility that the demand for Bitcoin may surpass the supply.
- The persistence of positive flows into BTC ETFs would make it difficult for bearish investors to take control of the market.
CryptoQuant’s CEO, Ki Young Ju, has issued a warning about a potential “sell-side liquidity crisis” that could unfold by September if institutional flows into Bitcoin ETFs continue. Ki emphasizes that the growing significance of BTC as an institutional investment is in its early stages, especially with the robust performance and significant traction gained by ETFs in the United States.
Currently, BTC ETFs hold nearly $30 billion, marking the most successful launch in the history of these financial products. However, Ki suggests the possibility of this trend creating an unprecedented phenomenon where the demand for Bitcoin exceeds the available supply, potentially leading to a “sell-side liquidity crisis” for these ETFs.
Bears can't win this game until spot #Bitcoin ETF inflow stops.
Last week, spot ETFs saw netflows of +30K BTC. Known entities like exchanges and miners hold around 3M BTC, including 1.5M BTC by US entities.
At this rate, we'll see a sell-side liquidity crisis within 6 months. pic.twitter.com/qwAbZJwSOl
— Ki Young Ju (@ki_young_ju) March 12, 2024
The analyst highlights that as long as Bitcoin ETF flows persist, bearish investors will face challenges in gaining control of the market. In the past week, ETFs saw net positive flows of over 30,000 BTC, and Ki notes that exchanges and miners hold around 3 million BTC, with 1.5 million owned by US entities.
The Crisis Could Hit Bitcoin in September
Ki warns that a scarcity of available BTC for sale could arise in the next six months, affecting market liquidity. Even the Grayscale Bitcoin Trust (GBTC), experiencing daily outflows of around $500 million, has not significantly impacted the value of its BTC holdings due to the cryptocurrency’s price appreciation since the ETF’s launch in January.
The analyst suggests that when the demand reaches a tipping point, the impact on Bitcoin’s price could exceed market expectations. A liquidity crisis would limit the availability of sellers, resulting in a thinner order book, potentially leading to a higher cyclical peak for the cryptocurrency.
Ki also highlights the upward trend in the amount of BTC held in “accumulation addresses,” wallets that only receive incoming transactions. The US SEC recently postponed the decision to approve options trading on Bitcoin ETFs, which could attract new participants, such as hedge funds, to the cryptocurrency market. Additionally, the SEC is evaluating multiple leveraged BTC ETFs.
