ETFs drive Bitcoin (BTC) price action… “On-chain influence waning; inflows are the key variable”

An analysis suggests that the primary factor determining Bitcoin (BTC) price action is not on-chain activity but exchange-traded fund (ETF) flows.

According to crypto-focused media outlet CoinDesk on the 8th (local time), Jim Ferraioli, Managing Director of Crypto Research & Strategy at Charles Schwab, said, “Since Bitcoin hit an all-time high last October, on-chain activity has steadily declined,” adding that “in the current market, ETF inflows are functioning as the key variable driving BTC prices.”

He explained that “falling transaction fees, gradual selling by long-term holders, and Bitcoin balances on exchanges hitting record lows are occurring simultaneously,” and that “in this environment, Bitcoin’s price is moving almost entirely in line with ETF flows.” He added, however, that “truly large institutional investors have not yet fully entered the market,” and that “if clear legislation and regulatory frameworks are put in place, they could provide momentum to sustainably support a Bitcoin rally.”

Gerry O'Shea, Head of Global Market Insights at crypto asset manager Hashdex, also pointed to potential catalysts ahead. He said, “Over the next few weeks, a new trigger could emerge to support a rise in BTC prices,” adding that “a shift in U.S. monetary policy or progress on crypto-related legislation would be representative catalysts.”