The market is constantly buying, institutions are also buying, who is selling? In addition to the overall supply and demand relationship, the futures market is also one of the key influencing factors.
Bitcoin
Spot
ETF
The inflow volume shows that the market is constantly buying, institutions are also entering the market to buy, but the market trend seems to be going in the opposite direction, continuously falling, so who is selling? As we enter 2024, market participants’ focus is increasingly on the inflow and outflow of Bitcoin spot ETFs, as if these data have become the key to understanding the true dynamics of the market.
It is important to consider total demand and total supply.
First, let me tell you who is selling. OG is selling, they own more BTC than the total of all ETFs combined. They sell every bull market. This pattern has been around for as long as the Bitcoin genesis block.
To better understand this phenomenon, we can refer to the following chart: age of coins x number of coins sold. This chart reveals OG’s selling behavior in the market and its impact on market trends.
We are currently in the “modern era” of Bitcoin. Since 2017, “paper BTC” has begun to flood the market.
The futures market is also a key factor influencing market trends.
In the past, if you wanted to buy coins, you had to purchase real BTC. But in recent years, you can buy so-called paper BTC. This means that those who do not have real coins can sell you that piece of paper.
Together, you have created synthetic Bitcoins.
This potential demand for BTC has been transferred to paper BTC, which is satisfied by counterpart traders who do not have BTC to sell, using only dollars as a bet.
In the past, the reason Bitcoin prices could grow exponentially was because the only sellers were a small number of early holders selling and miners selling a small amount of newly mined coins.
Now, you should pay more attention to the magic of “paper BTC”.
The bear market in 2022 was caused by the proliferation of “paper BTC”, while in fact, real spot holders did not actually sell.
In the current bull market, I have marked periods of increasing paper BTC, during which the price did not rise accordingly.
We are currently in such a phase.
So, focusing solely on ETF purchases is not enough to fully grasp market trends, it is also necessary to consider on-chain data, derivative data, technical price trends, and other factors.
All these indicator factors complicate the situation of demand and supply.
Analyzing them comprehensively is more like an art than a quantifiable science.
In this market full of variables, everyone is just making logical guesses.