The evolvement of Bitcoin has led to its trajectory being linked to several other markets, with certain market stances hinting at where BTC might be headed. However, recent data indicates a shift in this phenomenon, particularly concerning the correlation between Bitcoin’s price and exchange-traded fund (ETF) movements.
A new observation from a CryptoQuant analyst on the QuickTake platform has revealed that BTC ETF, specifically the ETC Group Physical Bitcoin (BTCE) based in Germany, has shown a historical pattern of syncing with Bitcoin’s price movements. This correlation is now diverging.
Historically, increases in BTCE’s Bitcoin holdings have often aligned with significant price rallies in Bitcoin itself. For instance, a notable accumulation in the fund’s reserves from 0 to over 23,480 BTC in 2020 coincided with Bitcoin’s surge to its first historic peak in April 2021. Conversely, reductions in holdings typically indicated a forthcoming drop in Bitcoin prices.
However, since January 2024, a shift in this pattern has been observed. Despite the fund’s Bitcoin reserves decreasing from a peak of 27,980 BTC to below 17,000 BTC, the anticipated decline in Bitcoin’s price hasn’t materialized to the extent predicted by past trends. This divergence suggests a potential decoupling of the fund’s activities from direct Bitcoin price movements, marking a change in how BTC’s market relation with this product might be interpreted.
The CryptoQuant analyst revealed that this observation is evident in the 30-day variance of the BTCE fund analysis. This analysis showed that positive variances in the fund’s reserves were typically associated with Bitcoin price rises, and negative variances correlated with price drops. The recent period, however, stands as an exception to these findings, with Bitcoin’s price rising despite continued sell-offs from the fund.
As of now, Bitcoin is trading for $59,144, following a 3.6% dip in the past 24 hours. This decline comes after the US inflation fell to 2.9%, the lowest since 2021. Amid this price performance, Economist and Trader Mikybull Crypto has pointed out the potential for a Bitcoin rally, based on the global liquidity index breaking out of a 2-year resistance. This correlation suggests that a strong and massive rally for Bitcoin is looming.
