- Bitcoin prices have been surging recently, reaching $64,000 this week, coinciding with the launch of spot bitcoin ETFs in the US.
- These new spot bitcoin ETFs are creating a demand shock by requiring 2,800 bitcoins daily to back their shares, far more than the 900 mined per day.
- This demand shock from the ETFs is directly impacting the bitcoin price, with bitcoin surging 40% since the first spot bitcoin ETFs began trading.
Bitcoin prices have been surging recently, reaching as high as $64,000 this week. This rise has coincided with the launch of spot bitcoin ETFs in the US. These new financial products are having a major impact on the Bitcoin market.
Spot Bitcoin ETFs Are Driving Up Demand
The newly launched spot bitcoin ETFs are requiring a large amount of bitcoin to back their shares. While only 900 new bitcoins are mined per day, these ETFs are demanding 2,800 bitcoins daily.
According to James Butterfill, Head of Research at CoinShares, this is creating a significant demand shock in the Bitcoin market. Butterfill notes that exchange bitcoin reserves have dropped 28% since 2020, indicating that new demand is outstripping supply.
Impact on Bitcoin Price
This demand shock from the ETFs is directly impacting the bitcoin price. On Wednesday, as spot bitcoin ETFs hit another daily trading volume record above $6 billion, bitcoin’s price whipsawed around $60,000.
The price action shows the power these new products have to move the market. Bitcoin has surged around 40% in the month since the first spot Bitcoin ETFs began trading.
With bitcoin reaching a 3-month high of around $64,000, investors are trying to understand the factors driving the cryptocurrency‘s price performance. The launch of spot bitcoin ETFs and their continuous demand for bitcoin appears to be one of the main drivers.
