Bitcoin nears record high as ETF demand grows

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Grafa2024/10/31 10:00

By:Isaac Francis

Bitcoin (CRYPTO:BTC) is approaching its all-time high, driven by increased demand from exchange-traded funds (ETFs), according to a recent report from Cryptoquant.

As of late October, Bitcoin’s price was trading near $71,800 to $72,000, with ETF demand playing a key role in its rally.

Cryptoquant’s analysis reveals that ETF net purchases surged from -1,300 BTC to 5,800 BTC in October, with a peak single-day purchase of 7,700 BTC on October 13.

The report highlights that the availability of Bitcoin on over-the-counter (OTC) desks remains substantial, allowing ETFs to acquire Bitcoin without causing direct price fluctuations on exchanges.

According to Cryptoquant, the total amount of Bitcoin held by OTC desks is around 416,000 BTC, compared to 183,000 to 193,000 BTC recorded in the first quarter of 2024.

The report adds, “Higher OTC desk balances allow ETFs to source Bitcoin without the need to purchase on exchanges, thus avoiding any direct effect on the price.”

However, Cryptoquant notes that ETFs’ daily purchases represent a smaller share of OTC inventory compared to early 2024, indicating that further demand increases could eventually impact the available supply.

Over the past 30 days, OTC desks have added just 3,000 BTC to their holdings, a stark contrast to increases of 77,000 BTC in August and 92,000 BTC in June.

Additionally, the average daily inflow to OTC desks has dropped to 90,000 BTC, marking a 52% decline from earlier in 2024.

These diminishing inflows could exert upward pressure on Bitcoin’s price as demand continues to rise.

Cryptoquant’s findings suggest that Bitcoin’s ability to surpass its all-time high depends on the sustainability of current ETF demand levels or further increases.

The report emphasises that while the current OTC supply dynamics have cushioned the direct impact on market prices, sustained demand could gradually deplete OTC reserves and drive Bitcoin higher.

At the time of reporting, the Bitcoin price was $72,112.73.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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