ETF Buying Three Times More Bitcoin Supply than New Bitcoin Supply – Here’s What You Must Know

Bitcoin starts a new week in fighting form as $67,000 comes back to meet TradFi markets. The largest cryptocurrency edges nearer to a rematch with final resistance around all-time highs past and present—at $69,000 and $73,800.

Whether it makes this within coming days is the prime preoccupation on the minds of market participants, and several factors could join forces in leading to bullish continuation. These include cues from United States economic policy as the Federal Reserve releases minutes from its May meeting, while U.S. unemployment data is also waiting in the wings.

As far as the BTC price action is concerned, traders are getting ever more confident that a local bottom is on the table and that upside is what should follow two months of consolidation.

Meanwhile, a refreshing divergence may be at play—prices are higher, but sentiment is, in fact, hovering around lower levels than when all-time highs were last hit in March. Could a more sustainable journey to price discovery be on the cards? Against this backdrop, Cointelegraph takes a closer look at the issues surrounding Bitcoin markets this week.

Bitcoin bulls keep the pressure below all-time highs Certainly, Bitcoin feels back in business this week, returning to near $67,000 into the Asia session after briefly dipping into the weekly close, data from Cointelegraph Markets Pro and TradingView shows. That brief spate of weakness accompanied geopolitical uncertainty from Iran, but markets soon forgot this as BTC/USD preserved its 10% May gains.

The latest data from monitoring resource CoinGlass now shows that the bulk of immediate overhead resistance lies just below $68,000. Liquidation data offered to X (formerly Twitter) by IT Tech, a contributor to on-chain analytics platform CryptoQuant Liquidation levels around spot price Offer their take on the latest thrust higher in BTC, which had investors cheerful on Sunday.

Source: Coinglass

"Beauty of a BTC weekly close. First Bullish engulfing weekly since October 2023," popular trader Crypto Damus commented. He was noting how a week ago, the candle had a bullish engulfing profile, meaning that it had erased past losses to close at $66,210.

Michaël van de Poppe, founder and CEO of trading firm MNTrading, repeated his views on a solid march toward new highs for Bitcoin. "Bitcoin is likely going to continue to be moving in this range. I'm not expecting massive volatility to come," he told X this weekend.

"I'd rather expect consolidation and slow upwards movements towards the all-time high." Van de Poppe nonetheless repeated that he expected altcoins to "outperform" meanwhile, having suffered more acutely from Bitcoin's consolidation. "Slow upwards grind, slowly but surely accelerating towards a vertical move in Q3/Q4," a further post said. Cointelegraph reported by contrast, that not everyone was posting such predictions. Over the weekend, trader and commentator Credible Crypto disclosed he considered that $60,000 or even lower should come next for BTC/USD.

U.S. jobs data, Fed headline macro week This week, on the macro landscape — in contrast to last — is not dominated by U.S. economic reports in the coming days. Instead, the Fed takes center stage in the form of a slew of speaking appearances from senior officials. While Chair Jerome Powell is not due to be among them, markets nonetheless watch the language used by governors and others for clues as to future policy.

The minutes from the May meeting of the Federal Open Market Committee, where interest rates were discussed, are due for release on May 22. Thereafter, U.S. jobless claims could provide another bout of volatility for risk assets, continuing a trend seen this month and before. At the same time, attention is increasingly focusing on favorable liquidity conditions in both the U.S. and beyond.

In his latest X content, financial commentator Tedtalksmacro suggested that crypto bull run is "far from over" as a result. Tedtalksmacro flagged an early liquidity cycle now beginning, along with M2 money supply displaying "plenty of room to the upside for easing liquidity conditions."

"While liquidity is definitely back in crypto (BTC ETFs), the velocity of inflow has not yet seen a manic phase consistent with cycle tops," he continued about crypto market trends.

Bitcoin ETFs preempt "new faith" in BTC Tedtalksmacro touched on what could shape up to be a strong comeback from the U.S. spot Bitcoin exchange-traded funds (ETFs). After struggling for weeks on end since Bitcoin's all-time highs in March, the spot ETF products are seeing renewed interest.

Last week, inflows hit almost $1 billion — the best weekly performance since that time. "Expect these to only increase as price drifts higher and tradFi once again renew faith in the asset," Tedtalksmacro concluded. That ETF demand is in a fresh environment — Bitcoin's block subsidy is half what it was in March, while large inflows are prompting the ETF providers to buy far more BTC than that which comes onto the market from miners daily.

"Bitcoin ETFs have purchased 21,700 BTC ($1.5B) in the month to date," Thomas Fahrer, CEO of crypto reviews portal Apollo, reported last week. "This is 3X the supply of new bitcoin from miners." The U.S. spot ETFs alone now hold about 2.8% of the total BTC supply.

Bitcoin exchange reserves drop to seven-year lows When it comes to demand for Bitcoin, few statistics paint a more bullish picture than exchange BTC reserves. Fresh data currently making the rounds on social media place the amount of Bitcoin available for purchase on major trading platforms at its lowest since 2017.

This comes courtesy of CryptoQuant, which puts the tally at 1,918,417 BTC as of May 19. A year ago, this was around 400,000 BTC higher. "Right on time for a second wave of ETF Flows," Fahrer commented on the phenomenon, drawing attention to a combination of "demand shock" and "inelastic supply" going forward. "In 2021, during the peak of the bull market, approximately 2.7 million Bitcoin were held in exchange reserves, with Bitcoin trading around $69,000.

Source: CryptoQuant

Three years later, the reserves have decreased to about 2 million Bitcoin, yet the trading prices are nearing historical highs," CryptoQuant contributing analyst meanwhile wrote in one of its Quicktake market updates last week. "The recent halving event has effectively cut the potential new supply from miners by half, significantly reducing the likelihood of new Bitcoin entering the market through sales. Given these dynamics, it becomes challenging to maintain a bearish stance on Bitcoin."

Sustainable greed? In what could become an encouraging sign for short-term market sentiment, the Crypto Fear & Greed Index is not rushing to extremes on the current BTC price move higher. The Index, which uses a basket of factors to determine the sustainability of overall crypto sentiment, currently stands at 70/100.

While "greedy," this is so far devoid of the excessive levels seen during the trip to Bitcoin's all-time highs in March, when it hit 90/100. Analyzing the mood, research firm Santiment nonetheless determined the most bullish feeling on Bitcoin since January. "The crowd's sentiment has shifted toward Bitcoin after the surprise bounce above $66K Wednesday (and now above $67.2K)," part of an X post from May 17 reads. Santiment added that "FOMO" on the part of buyers needs to stay low in order for the positive trend to continue.