Bitcoin (BTC) Market Dynamics: Why Price Does Not Correlate with Positive ETF Dynamics

Bitcoin is experiencing major correction despite high net spot ETF inflows. Crypto analyst Willy Woo has shared his take on the recent BTC price drop.

Bitcoin (CRYPTO: BTC) is experiencing a major correction despite high net spot ETF inflows.

Crypto analyst Willy Woo has shared his take on the recent BTC price drop. In his recent post on Twitter, he provides some insights into the current Bitcoin sell-off and why its price does not correlate with positive BTC ETF dynamics.

“ETFs are buying… Institutions are buying… Who the hell is selling?”

2024 brought a mass of commentators looking at ETFs flows, as if that's all that matters.

What matters is total demand and supply.

Here's a 101 thread on how the modern #Bitcoin market works.

Who is selling?

Woo points out that while ETFs and institutions are actively buying BTC, focusing solely on ETF flows is flawed. The primary sellers, according to Woo, are the "OGs" — original BTC holders. These early adopters possess significantly more BTC than all ETFs combined, and they tend to sell during every bull market.

The chart reveals a recognizable pattern that shows up during bull runs every cycle.

Paper is everything

The introduction of paper BTC through futures markets since 2017 has significantly altered market dynamics. Paper BTC allows traders to buy synthetic BTC without holding actual BTC, which diverts direct demand away from real BTC.

In the past, Bitcoin’s price surged because only long-time holders and miners sold BTC. However, the 2022 bear market was influenced by a flood of paper BTC, despite minimal selling by spot holders. Woo notes that current conditions show periods where an increase in paper BTC does not lead to a price rally, highlighting the impact of synthetic BTC.

Woo argues that understanding BTC’s market dynamics requires analyzing on-chain data, derivatives data and technical price action.

So… not a great idea to look solely at ETF buying.

On-chain data… derivatives data… technical price action…

All of these add to the demand and supply picture.

Putting it together is an art, not a quantifiable science.

Everyone is just making educated guesses.

Thus, focusing solely on ETF buying is insufficient; a broader view is necessary to capture the full demand and supply picture.

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-btc-market-dynamics-price-correlate-positive-etf-dynamics.html

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