Will Bitcoin ETF Demand Spark a Supercycle? Analysts Weigh In

Bitcoin ETFs have helped push BTC to unprecedented heights this year, but analysts differ on how these investment vehicles may determine where Bitcoin goes next.

A Bitcoin ETF is a product that trades like a stock on a traditional exchange and enables retail investors to gain exposure to BTC without buying and storing the asset directly. The launch of Bitcoin ETFs in the U.S. market, denied for over a decade by the SEC, has led to tens of billions of dollars entering the crypto market since January.

Still, they're not as significant a game-changer for Bitcoin’s price trajectory as many people think, according to lead Glassnode analyst James Check.

In a video presentation on Monday, the analyst reviewed key metrics related to Bitcoin’s cyclical price movements and weighed them against the asset’s price today. He also reviewed other historical catalysts of BTC demand, which on-chain data suggests were quite comparable to what is being driven by the ETFs.

"These ETFs, they're not that new,” he said. “In 2019, there was the PlusToken Ponzi scheme over in China that absorbed—in about 3 or 4 months—about two percent of the Bitcoin supply. We have in 2021, GBTC, which vacuumed up 650,000 Bitcoin in four months.”

By comparison, the nine newly launched Bitcoin ETFs have absorbed roughly 508,000 BTC since going live in January. When including the Grayscale Bitcoin Trust (GBTC), all 10 spot Bitcoin ETFs hold over 800,000 coins.

Piercing the belief that the crypto market is in the throes of a “supercycle,” the analyst highlighted how on-chain investor behavior today remains similar to when Bitcoin’s price surged around past bull market milestones.

For example, investors’ net realized profit and loss surged in both 2019 and 2021, he said, a sign that long-term holders were cashing in on their dormant, cheaply bought coins. The same phenomenon has been visible over the past several months, this time taking the form of massive outflows from GBTC where investors have held Bitcoin for years.

“We've actually seen this happen many times before in different phases, slightly different characteristics... these are all mechanics that we've seen before,” Check argued.

Comparisons to previous cycles depend on the measuring stick used, however. While on-chain profit-taking patterns among long-term investors seem familiar, the sheer strength of accumulation among Bitcoin’s most diehard HODLers is certainly not.

“We have seen unprecedented Bitcoin demand growth so far this year,” said CryptoQuant Head Of Research Julio Moreno to Decrypt.

“The year-over-year growth in the Bitcoin balance of large investors is also growing at record-high levels, signaling strong investor demand,” he explained. Furthermore, permanent Bitcoin holders—addresses that have bought but never sold their BTC—absorbed about 200,000 BTC per month since ETFs went live, compared to just about 40,000 BTC before their launch.

“All this points to never-seen-before Bitcoin demand, much larger than in other periods,” Moreno concluded.

Glassnode’s Check has previously characterized the current Bitcoin bull market as one of the “most robust” in history and predicted that Bitcoin could top out at $250,000 before the end of 2025.