Bitcoin (BTC), the flagship cryptocurrency, is currently riding a wave of positive momentum, nearing its all-time high of $73,750, a record that many investors are eager to see broken. On October 29, Bitcoin’s price reached an impressive $72,200, just shy of surpassing that historical benchmark. Despite a minor price correction, many crypto enthusiasts remain optimistic that a breakthrough may occur in the near future. However, evaluating the intricate factors at play reveals a multi-faceted scenario, especially regarding Bitcoin’s availability and demand on over-the-counter (OTC) markets.
One of the key drivers of recent Bitcoin price fluctuations has been the increasing demand for spot exchange-traded funds (ETFs) in the United States. According to analysis by CryptoQuant, the net purchases from ETFs have surged, amplifying Bitcoin’s price action. At the beginning of the month, daily purchases hovered around 1,300 BTC, but this number has skyrocketed to 5,800 BTC by the end of October. This growth culminated on October 13, which marked a milestone with a single day recording of 7,700 BTC purchased via ETFs.
While these numbers are promising, they still fall short compared to earlier peak periods, particularly in February and March when daily purchases peaked at around 16,000 BTC. This disparity has led to concerns among investors regarding Bitcoin’s ability to capitalize on this momentum and break past its all-time high. The hesitations come not solely from the numbers but also from the inherent dynamics of the cryptocurrency market, which is often volatile and unpredictable.
An equally pressing consideration pertains to Bitcoin’s availability on OTC desks. The current balance of BTC on these desks has ballooned from just over 183,000 to around 416,000 BTC since the beginning of Q1 2024. Notably, the growth in available BTC has been substantial, posing a significant challenge for upward price momentum. With the OTC desks holding an increased inventory, BTC now represents only 1% to 2% of overall availability from daily ETF purchases, a stark decline from 9% to 12% earlier in the year.
This situation creates a paradox. Increased availability can inhibit upward movement due to a lower percentage of Bitcoin being actively sold or traded through ETF channels. High availability in the OTC market usually signals that many investors are holding onto their Bitcoin, anticipating higher prices in the future. Nevertheless, without concurrent declines in available inventory, significant price advancements like surpassing the $73,750 mark may remain elusive.
For Bitcoin to achieve new heights, a balanced interplay between demand and supply is essential. Analysts concur that a sustainable increase in ETF demand is critical to enhance the turnover of Bitcoin held on OTC desks. The current monthly growth of the total BTC balance on these desks has significantly contracted to merely 3,000 BTC, contrasting sharply with the previously recorded increases of 77,000 BTC and 92,000 BTC in earlier months.
This decline in inflow into OTC desks is a silver lining amidst the prevailing challenges. If this trend is sustained, and if ETF purchases can ramp up, we might finally witness a rich convergence that could spur Bitcoin to break its record high prices.
While Bitcoin’s near-term trajectory is promising, it is fraught with complexities stemming from both ETF demand and OTC supply dynamics. Investors and market analysts must remain vigilant and critically assess these changing conditions to navigate the evolving landscape of cryptocurrency effectively. As has always been the case in the crypto world, patience and analytical foresight may very well determine the success of Bitcoin in conquering its next price milestone.
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