In a recent discussion on X, Ki Young Ju, the founder of CryptoQuant, expressed concerns about the continuous flow of funds into spot Bitcoin ETFs, cautioning about a potential sell-side liquidity crisis within six months if the trend persists.
Ju’s comments come as a surge in spot Bitcoin ETF inflows has crossed the $10 billion mark for the first time.
Concerns Over Sell-Side Liquidity Crisis
Ju stressed, “Bears won’t be able to succeed unless the inflow into spot Bitcoin ETFs stops.” He highlighted that in the past week alone, there were netflows of over 30,000 BTC into spot Bitcoin ETFs, with major players like exchanges and miners collectively holding about three million BTC, of which 1.5 million BTC is held by U.S. entities.
Bears can’t win this game until spot #Bitcoin ETF inflow stops.
Last week, spot ETFs saw netflows of +30K BTC. Known entities like exchanges and miners hold around 3M BTC, including 1.5M BTC by US entities.
At this rate, we’ll see a sell-side liquidity crisis within 6 months. pic.twitter.com/qwAbZJwSOl
— Ki Young Ju (@ki_young_ju) March 12, 2024
Data from BitMEX Research reveals that spot Bitcoin ETFs have surpassed the $10 billion mark in inflows for the first time since their launch in January. This significant increase has raised concerns among market participants regarding a possible future sell-side crisis.
Ju also predicted that once the demand for spot Bitcoin ETFs reaches a critical point, the impact on Bitcoin’s price could exceed market expectations. He highlighted that a sell-side liquidity crisis could lead to a cyclical high surpassing forecasts due to limited liquidity and a shallow order book.
#Bitcoin is currently in the price discovery phase.
Once a sell-side liquidity crisis happens, its next cyclical top may exceed our expectations due to limited sell-side liquidity and thin orderbook.
This could occur once accumulation addresses reach around a total of 3M BTC. pic.twitter.com/HgwGbHR8fL
— Ki Young Ju (@ki_young_ju) March 12, 2024
Pointing out ongoing trends, Ju noted an increasing trend in BTC held by “accumulation addresses” – wallets characterized by inbound transactions only. However, he mentioned that the accumulation address would need to reach approximately 3 million BTC for the crisis to materialize.
Surge in Bitcoin ETF Inflows
Recent data indicates a significant influx of funds into spot Bitcoin ETF products in the U.S. market.
Specifically, on March 11, there was a net inflow of $505 million in these products, with BlackRock leading with daily inflows of $562 million. VanEck’s HODL product also experienced a notable surge, with inflows reaching $118 million on the same day.
The spike in inflows into VanEck’s HODL product can be attributed to a fee waiver campaign initiated by the company. VanEck has announced a fee waiver from March 12 to March 31, 2025. During this period, fees for the product will be waived until its assets reach $1.5 billion, after which a 0.20% fee will apply.
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