Bitcoin exchange-traded funds (ETFs) have permanently reduced volatility and altered Bitcoin market dynamics, according to analysts.
Bitcoin (BTC) will no longer experience “parabolic” price rallies or “devastating” bear markets, because BTC exchange-traded funds (ETFs) have permanently reduced volatility and altered market dynamics, according to Blockware BTC analyst Mitchell Askew.
“BTC/USD looks like two entirely different assets before and after the ETF,” the analyst wrote on Friday. The chart he shared showed a sharp reduction in price volatility following the January 2024 launch of the Bitcoin ETF in the United States. The analyst said:
“The days of parabolic bull markets and devastating bear markets are over. BTC is going to $1million over the next 10 years through a consistent oscillation between ‘pump’ and ‘consolidate.’ It will bore everyone to death along the way and shake the tourists out of their positions.”
Senior Bloomberg ETF analyst Eric Balchunas wrote that the reduced volatility has helped Bitcoin “attract even bigger fish and gives it a fighting chance to be adopted as currency.” The tradeoff to this is that there will likely be no more “God Candles,” the analyst added.
The effects of the Bitcoin ETF on market dynamics continue to be debated by market analysts, as the investment vehicle further intertwines traditional finance, institutional investors, and digital asset markets.
Related: Robert Kiyosaki warns of the risk posed by BTC, gold, and silver ETFs
Bitcoin ETFs altering crypto market dynamics
Bitcoin ETFs sequester capital into traditional investment vehicles that currently lack in-kind redemption and keep funds off-chain.
This stowing away of capital can prevent the rotation into altcoins, which crypto investors have come to expect from previous market cycles.
In July, net inflows into Bitcoin ETFs crossed the $50 billion mark, though the surge of capital into Bitcoin has not translated to increased onchain activity.
Retail investors are shifting into Bitcoin ETFs and gaining exposure through traditional financial instruments held by a fund manager or another financial fiduciary on their behalf, rather than holding BTC directly, according to analysts.
The demand for paper BTC and products like BlockRock’s Bitcoin ETF has led the asset manager to accumulate 3% of Bitcoin’s total supply, raising concerns about centralization among some market participants.
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