Bitcoin ETF Demand Rises, but Price Stalls — What’s Behind the Disconnect?
Bitcoin’s lackluster price performance despite significant ETF inflows has raised concerns about potential selling from long-term holders and external geopolitical factors.
Its price has increased only about 10%, far less than many investors expected. The disparity between capital inflows and price performance has triggered a wave of concern and speculation, reviving memories of BlackRock-Coinbase custody scrutiny.
Bitcoin’s Lukewarm Reaction to ETF Inflows
In a recent post, Matrixport highlighted the mismatch between the BTC price and inflows into spot Bitcoin ETFs over the past 8 weeks. In September 2024, BlackRock sought to modify its spot Bitcoin ETF (IBIT) amid concerns over Coinbase’s custodial practices.
At the time, some investors feared that ETF providers were being settled with IOUs rather than actual BTC, undermining price discovery. Coinbase CEO Brian Armstrong refuted the claims and stated all ETF-related transactions are settled on-chain within one business day.
Bloomberg’s ETF analyst dismissed the speculation, refuting the rumor that Coinbase was issuing Bitcoin IOUs for BlackRock and suppressing prices. The analyst attributed the lack of correlation between BTC ETF inflows and Bitcoin price to selling pressure among native Bitcoin holders rather than ETF issuers or BlackRock.
Despite persistent ETF inflows and stable on-chain fundamentals, traders remain skeptical.
