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Bitcoin breaks $61k on ETF potential, demand from existing holders, and low liquidity

October 15, 2021
  • The return of the bitcoin price above $60k comes on news that a bitcoin ETF is nearing approval. This has been so long awaited that the delay has arguably led to much deeper adoption of crypto as people have had to buy actual crypto to get exposure, preparing them for DeFi and Web 3.0 apps and so sowing the seeds for future disruption of traditional finance.
  • Liquidity has increased slightly in response to rising prices, with exchange balances increasing by approximately 50k bitcoin and 500k Ether in October to date. But inflows to exchanges and liquidity amongst institutional investors and traders remains low, suggesting continued price pressure if demand remains.
  • Despite a strong price rise so far in Q4, on-chain we are not seeing a replay of Q4 2020. That was driven by an influx of new, large investors, whereas currently buying is mostly from existing investors who entered in the last 12 months. The market may now be sufficiently large to sustain high prices without a constant large flow of new demand, which would be a sign of maturity beyond anything that an ETF approval could provide.
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