The recent surge in Bitcoin prices has once again brought the cryptocurrency to the forefront of the market. On the 7th of January, Bitcoin crossed the $100,000 milestone, reaching a peak of $102,000 before experiencing a sharp decline. Currently, Bitcoin is trading at $95,432.97, reflecting a 6.21% decrease in the past 24 hours.
This decline in Bitcoin prices has raised concerns about a potential supply shock caused by the surging demand from U.S. Spot Bitcoin ETFs. In December 2024, these ETFs purchased a staggering 51,500 BTC, nearly four times the amount mined during the same period. Analysts have noted that the demand from ETFs exceeded the available supply by 272%, indicating a significant imbalance in the market.
Crypto analyst Lark Davis has issued a warning about the scale of Bitcoin accumulation by these ETFs. In the second week of December, ETFs acquired 21,423 BTC, while miners could only produce 3,150 BTC in the same timeframe. This imbalance has led to concerns about a looming supply shock in the Bitcoin market.
Global Spot Bitcoin ETFs collectively held 1,311,579 BTC on the 17th of December 2024, amounting to 6.24% of Bitcoin’s total supply. Davis predicts that during peak bull market cycles, these ETFs could accumulate 10-20% of Bitcoin’s total supply, further exacerbating fears of a supply shock.
On the other hand, Ethereum ETFs closed 2024 strong, signaling a potential shift in investor focus for 2025. Despite a drop in inflows for Bitcoin ETFs, Ethereum ETFs reported outflows totaling $86.8 million on the 7th of January. However, Ethereum ETFs have shown resilience, closing 2024 with $35 billion in total inflows, reflecting growing confidence in Ethereum’s long-term value.
While Bitcoin ETFs continue to dominate market activity, Ethereum ETFs are steadily narrowing the gap. Analysts believe that 2025 could mark a significant shift in investor focus, potentially positioning Ethereum ETFs as leaders in the crypto investment landscape.
Overall, the surge in Bitcoin prices and the strong performance of Ethereum ETFs indicate a dynamic and evolving crypto market landscape. Investors will need to closely monitor these trends to make informed decisions in the ever-changing world of cryptocurrencies.