In a recent discussion on X, CryptoQuant founder Ki Young Ju expressed alarm over the continuous flow of capital into spot Bitcoin ETFs. Ju cautioned that if this trend persists, there could be a sell-side liquidity crisis within a span of six months. He stressed that “Bears can’t win this game until spot Bitcoin ETF inflow stops.”
Rising Inflows and Market Observations
The influx of capital into spot Bitcoin ETFs has surpassed $10 billion for the first time, with over 30,000 BTC in netflows recorded in the past week alone. Major market players such as exchanges and miners currently hold around three million BTC, with half of that amount held by entities in the U.S. Data from BitMEX Research also highlights that the $10 billion mark in inflows has been breached, causing concerns among market observers about the possibility of a future sell-side crisis.
Ju made a forecast that once the tipping point is reached in terms of spot Bitcoin ETF demand, the effect on BTC’s price could exceed market expectations. He emphasized that a sell-side liquidity crisis could lead to a cyclical peak that surpasses projections due to limited sell-side liquidity and a thin orderbook. While noting an upward trend in BTC held by “accumulation addresses”, Ju mentioned that the crisis would likely occur when these addresses collectively hold around 3 million BTC.
Recent data points towards a significant inflow of capital into spot Bitcoin ETF products in the U.S. market. On March 11 alone, $505 million in netflows were recorded, with BlackRock leading the way with daily inflows of $562 million. VanEck’s HODL product also saw a notable increase in inflows, reaching $118 million on the same day. The surge in capital towards VanEck’s HODL product can be attributed to a fee waiver campaign launched by the company. This campaign, effective until March 31, 2025, will waive fees for the product until its assets reach $1.5 billion, after which a 0.20% fee will be applied.
The concerns raised by CryptoQuant founder Ki Young Ju highlight the potential risks associated with the continuous influx of capital into spot Bitcoin ETFs. Market observers, along with Ju, warn of a looming sell-side liquidity crisis if this trend persists unchecked. The impact on BTC’s price and market dynamics could exceed expectations if a tipping point is reached in terms of demand for spot Bitcoin ETFs. It is essential for investors and market participants to closely monitor these developments and assess the risks associated with the current market environment.