CryptoQuant’s CEO highlights a looming sell-side liquidity crisis for Bitcoin, as Bitcoin ETFs increasingly absorb the market’s available supply, forecasting a critical juncture in supply dynamics for the year.
Ki Young Ju, the founder of CryptoQuant, recently voiced his concerns on X regarding the steady influx of investments into spot Bitcoin ETFs. He alerted to a potential liquidity crunch on the sell-side expected in the next six months if the current investment pace continues.
This warning is set against a backdrop of significant growth in spot Bitcoin ETF investments, with total inflows breaching the $10 billion milestone for the first time.
Potential for a Liquidity Crunch
Ju stated, “Bears are at a disadvantage until the flow into spot Bitcoin ETFs halts.” Highlighting the recent surge, he noted that over the past week, spot Bitcoin ETFs have seen an addition of over 30,000 BTC. This is while exchanges and miners collectively hold close to three million BTC, half of which is in the U.S.
BitMEX Research recently reported that for the first time since their introduction in January, spot Bitcoin ETFs have accumulated more than $10 billion in inflows. This uptick has sparked concerns about a possible future liquidity crisis on the sell-side among market analysts.
Ju predicts that reaching a critical demand level for spot Bitcoin ETFs could trigger a significant price rally for BTC, exceeding most forecasts. He suggests that the ensuing sell-side liquidity crisis might catalyze a market peak due to the scarcity of available sell orders and a sparse order book.
Ju highlighted the growth in “accumulation addresses” – wallets that have only seen incoming transactions. He estimates that these addresses must hold approximately 3M BTC for the anticipated crisis to unfold.
Surge in Bitcoin ETF Inflows
Recent data indicates a substantial influx of investment into spot Bitcoin ETFs in the U.S. market.
On March 11, these ETFs recorded netflows of $505 million, with BlackRock leading the charge with daily inflows of $562 million. Additionally, VanEck’s HODL ETF experienced a significant increase, with inflows reaching $118 million on the same day.
The boost in VanEck’s HODL ETF inflows is linked to the firm’s recent fee waiver campaign. Starting from March 12 until March 31, 2025, VanEck will not charge fees on this ETF until its assets hit the $1.5 billion mark, after which a fee of 0.20% will apply.