In this week's analysis, my focus begins with a scrutiny of the competition surrounding Bitcoin ETFs, unraveling the continuous shift of long-term capital in that direction. Additionally, I shed light on the surging demand for on-chain lending protocols, steadily expanding beneath the surface.
Key Metrics - Weekly Changes
Bitcoin (BTC)
- Price: $41,200 (-10.8%)
- Total Fees: $39.0M (+19.8%)
- Exchange Flows: +$360M (+$150M)
Ethereum (ETH)
- Price: $2,460 (-5.7%)
- Total Fees: $62.0M (+25.8%)
- Exchange Flows: -$460M (-$350M)
Insights
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Network Fees: A gauge of the willingness to spend and the demand to use Bitcoin or Ether. Notably, fees rebounded alongside increased market volatility.
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Exchanges Netflows: Bitcoin witnessed a sixth consecutive week of inflows into centralized exchanges (CEXs), accumulating nearly $2B in net deposits since December. Conversely, ETH experienced $460M in net outflows from CEXs, showcasing its sustained relative strength.
Bitcoin ETF Competition
A week post the Bitcoin ETFs launch, the market reflects mixed sentiments regarding their immediate impact. Despite Bitcoin's 16% price dip from its post-approval high, currently hovering around $41,000, the ETF competition is intensifying.
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Long-Term Rotation: Bitcoin's average holding time of transacted coins reached an all-time high on Monday as investors exited GBTC.
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Grayscale's Move: Grayscale successfully converted its GBTC product into an ETF, maintaining a hefty 1.5% fee, five times greater than Blackrock's fee. Consequently, GBTC recorded $2.2B in outflows, losing almost 10% of its assets under management.
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Capital Dynamics: The extent to which these outflows impacted the market remains unclear. However, the aggregate amount held by Bitcoin ETFs increased by approximately $1B net after GBTC's outflows, indicating a net capital inflow into Bitcoin in traditional finance markets.
Post their debut, Bitcoin ETFs have surpassed silver ETFs as the second-largest commodity by AUM, second only to gold.
Source: intotheblock Show Less
