Bears Losing Clout: Bitcoin Absorbs $100M+ in ‘Sell-Side Days’

Bitcoin sellers have failed to trigger a significant correction in the current bull market cycle, according to analysis by Glassnode’s lead on-chain analyst, Checkmate. Despite Bitcoin’s retracement from its all-time high near $74,000, the price pullbacks have been relatively mild, with the largest drawdown reaching just 20% in September 2021. This is significantly less compared to previous bull market cycles, where pullbacks of over 50% were observed, including the outlier event in March 2020 during the COVID-19 pandemic. Checkmate expressed surprise that a 20% pullback has yet to occur in the current cycle but acknowledged that historical statistics suggest it may still happen.

One significant factor influencing the Bitcoin market dynamics is the introduction of US spot Bitcoin exchange-traded funds (ETFs) in 2024. Since their launch in January, these ETFs have purchased over 500,000 BTC, providing substantial support to the buy-side. Alongside this, the decreasing BTC balances on exchanges further fuel optimism for a return to price discovery. Some caution that the inflows into ETFs should be viewed in the context of the broader market, with senior ETF analyst Eric Balchunas stating that without the ETFs, Bitcoin’s price would likely be around $30,000.

Balchunas also noted that net withdrawals from ETF products are a common occurrence and are part of standard investor behavior. While the ETFs’ performance has been impressive, it is important to consider the bigger picture. The surge in interest and investment in Bitcoin through these products has undoubtedly contributed to its current price levels but should be evaluated relative to other market factors.

The analysis suggests that Bitcoin sellers have been unable to trigger a significant correction in the current bull market cycle. While previous cycles have experienced substantial pullbacks, the current cycle has seen relatively mild price fluctuations. The introduction of US spot Bitcoin ETFs has provided strong support on the buy-side, along with other factors such as decreasing BTC balances on exchanges. It is important to maintain perspective and consider these developments as part of the larger market dynamics.