Are people relying too much on ETFs for Bitcoin growth?

[d5000]

ETFs were the main price driver in late 2023 and early 2024, roughly from the $30-35k to the $50-70k level. It is very likely that the price would indeed have been lower in that timeframe if they weren't approved in the US.

But from that moment on they became probably a component of the price but not the main one.

The question where we would stand if the ETFs weren't approved is however difficult to answer for me. A large part -- more then half! -- of the BTC which are now under the custody of ETFs were already custodied by derivative companies, mainly by the Grayscale Bitcoin Trust. This means that the increase in ETF holdings isn't as spectacular as it seems, and thus the influence of the ETFs' buying activity in the market may be overstated by some.

It is also possible that if the ETFs were not approved, models like StrategyBTC would have become more common, and would have been the main methods of exposure for those entities who can't buy spot Bitcoin (e.g. pension funds).

So I think these entities would have found some other way to invest im BTC. And the fact that they want to invest in it, is a sign for Bitcoin's maturing process.

I don't like the ETFs but they were probably very much inevitable, as ETFs on other commodities are.

[dezoel]

In the short term it would have a very bad impact on the price, but in the long term I don't think it would have catastrophic consequences. It is possible that those who now trade through ETFs would do the same through CEXs if they had no other choice.

That's just not how consumers act. People buy BTC ETFs because it's another button on their brokerage app, and it looks and acts the same (say for tax purposes) as the stocks they buy. This also confers a massive amount of safety to Bitcoin that it wouldn't otherwise have (the irony here is so thick it's simply crazy btw).

Losing the ETFs would mean Bitcoin loses millions of consumers. That would be very bad for the price, and quite permanently.

Of course this is an academic conversation: we're not going to lose the ETFs unless the US cracked down on Bitcoin generally (say if Bitcoin became associated with a very unpopular outgoing political party for instance). If that happened, Bitcoin's price would have much bigger problems than just the ETFs being canceled.

The added layer is the problem. Meaning that, if it is 1 to 1 ratio, as in if they do buy ETF, then the ETF has to buy bitcoin to cover that, it works and there is nothing wrong with that.

But we all know that finance world will do layers on that, and not going to let it be like that. Meaning, they are going to end up with a situation where you are "betting" on price of bitcoin, and not actually buying bitcoin. That is the fear about future of these financial markets that I have and many do.

[legiteum]

The added layer is the problem. Meaning that, if it is 1 to 1 ratio, as in if they do buy ETF, then the ETF has to buy bitcoin to cover that, it works and there is nothing wrong with that.

But we all know that finance world will do layers on that, and not going to let it be like that. Meaning, they are going to end up with a situation where you are "betting" on price of bitcoin, and not actually buying bitcoin. That is the fear about future of these financial markets that I have and many do.

Indeed. One thing that makes me laugh occasionally is Bitcoin extremists cling to the "21M coin limit" which is utterly meaningless in the context of financial instruments that can multiply the effective supply of BTC a thousand or a million times.

That's what happens to any instrument that is, like Bitcoin is, a pure instrument with absolutely no connection to the practical world. In other words, realistically, Bitcoin has no unique and decisive practical benefit (not even like that of physical gold for instance). Because of that, the "thing" that people like about Bitcoin is that it's a speculation instrument. The product is speculation as an end in itself. Hence when speculation products are layered on top of Bitcoin, they make perfect sense and appeal to the exact same audience as Bitcoin--and are thus very popular.

[YOSHIE]

What do you think 
Are ETFs the main driver now, or just one part of the bigger picture?

If it is speculated that there is a connection between the development of Bitcoin and ETFs, as far as I know, investors who enter the ETF exchange are not low-class investors, there are world-class investors gathered there, they can buy up to dozens of crypto assets, especially Bitcoin, in large quantities.

Because Bitcoin flows are influenced on the basis of buying and selling, in this case those in the ETF can do it in real-time. Moreover, as far as I know, the Bitcoin ETF will provide safe access for investors and easy access, be it technical convenience, traders and so on.

Given that a Bitcoin ETF allows investors direct exposure to the Bitcoin price than traditional stock exchanges, it has its own appeal for investors in general, they can store their Bitcoin assets, without having to put them in a crypto wallet, that's the basis if I speculate that investors really depend on and believe in ETFs.

[Odusko]

High capital inflow into the market will definitely change the price of Bitcoin and most of the high capital inflows are through Bitcoin ETFs and lately attention has been in that direction, speculation around the level of ETF impact on Bitcoin's current market value and how sustainable that impact is, and the level of control that it brings to the market at the same time.

[jossiel]

Main driver? no.

Part of the drive? yes.

The market has driven with so many factors for each of the bull run cycle that we got in.

For the recent bull run, it can be said that it's one of the drivers of it but it isn't actually the main one.

[fuguebtc]

Main driver? no.

Part of the drive? yes.

The market has driven with so many factors for each of the bull run cycle that we got in.

For the recent bull run, it can be said that it's one of the drivers of it but it isn't actually the main one.

So, in your opinion, what is the main driver in this bull cycle if not ETF?

Bitcoin reached an ATH when news of ETF approval was announced, and this happened before the halving. Since Bitcoin ETF were approved, a massive amount of money has flowed into the market. Not stopping there, this has created significant confidence in Bitcoin among investor, institutions, and traditional companies. If you notice, most news about organization and companies buying bitcoin, adding it to national treasuries or bitcoin reserves...appears after the ETF are approved

Therefore, in my opinion, it was not the sole driving force, but it played a  major role in the bull market.

[jossiel]

Main driver? no.

Part of the drive? yes.

The market has driven with so many factors for each of the bull run cycle that we got in.

For the recent bull run, it can be said that it's one of the drivers of it but it isn't actually the main one.

So, in your opinion, what is the main driver in this bull cycle if not ETF?

Bitcoin reached an ATH when news of ETF approval was announced, and this happened before the halving. Since Bitcoin ETF were approved, a massive amount of money has flowed into the market. Not stopping there, this has created significant confidence in Bitcoin among investor, institutions, and traditional companies. If you notice, most news about organization and companies buying bitcoin, adding it to national treasuries or bitcoin reserves...appears after the ETF are approved

Therefore, in my opinion, it was not the sole driving force, but it played a  major role in the bull market.

There have been some bitcoin futures ETF approval on 2021 as well. But they weren't as big as the recent ones and they also part of the drive of the 2021 bull run.

As a natural cycle that we always get to see. The usual effect of halving IMHO of this market still one of the most important drivers.

And as said with the reserves, it's not the same as the etf so it's a different factor and maybe it probably be one of the main drivers for the recent bull.

[colinistheman]

And as said with the reserves, it's not the same as the etf so it's a different factor and maybe it probably be one of the main drivers for the recent bull.

This is not true, because after all the news and rumors about a strategic Bitcoin reserve. In fact, the US still does not actually have a proper Bitcoin reserve. And to date, no other country or central bank has officially recognized and included Bitcoin in its national reserves. Therefore, it cannot be said that this is the main driver for the recent bull.
I believe that a bull market is not driven by a single factor, but rather by a combination of different factors.

[jossiel]

And as said with the reserves, it's not the same as the etf so it's a different factor and maybe it probably be one of the main drivers for the recent bull.

This is not true, because after all the news and rumors about a strategic Bitcoin reserve. In fact, the US still does not actually have a proper Bitcoin reserve. And to date, no other country or central bank has officially recognized and included Bitcoin in its national reserves. Therefore, it cannot be said that this is the main driver for the recent bull.
I believe that a bull market is not driven by a single factor, but rather by a combination of different factors.

The market is speculative.

And even there's no actual reserve yet that's being done, the news when it was announced added to the contribution of the bull run last time.

So everyone who bought at that time were speculating that it would drive the market up and, it did.

[Orpichukwu]

High capital inflow into the market will definitely change the price of Bitcoin and most of the high capital inflows are through Bitcoin ETFs and lately attention has been in that direction, speculation around the level of ETF impact on Bitcoin's current market value and how sustainable that impact is, and the level of control that it brings to the market at the same time.

The level of capital ETF brings to the Bitcoin market is not something to deny; we can't just ignore it completely. At the same time, it's not enough for us to keep or hope that ETF is the only thing which could help push Bitcoin's price to the next level. If all the ETFs are pulled out, the price will dump, but give Bitcoin a few years, and individual investors will do it again and pull it back to another high.

[Zaguru12]

The level of capital ETF brings to the Bitcoin market is not something to deny; we can't just ignore it completely. At the same time, it's not enough for us to keep or hope that ETF is the only thing which could help push Bitcoin's price to the next level. If all the ETFs are pulled out, the price will dump, but give Bitcoin a few years, and individual investors will do it again and pull it back to another high.

If bitcoin had actually been down before the approval of this ETF I think many would have been forced to believe that it’s actually this ETF that helped push bitcoin, but bitcoin was actually having and all time high of $69k from absolutely no value at all and also already had large number of adopters already while ETF came with its own adoption growth, bitcoin adoption shouldn’t be only attached to ETF.

Yes the institutions through ETF has immensely increased the rate they accumulate bitcoin and this is increasing bitcoin demand but also reducing bitcoin to been used as an asset for holding only. Should there be sales from this institutions today bitcoin market will definitely react but as usual it will definitely recover back again

[Darker45]

ETFs play a big role in the market. More than a hundred billion worth of Bitcoin in USD is into ETFs. Not to mention that these products are offered by the top investment firms and wealth managers in the world. So, you can't underestimate the impact of ETFs in the Bitcoin market. But it's not like ETFs aren't part of adoption. They're part of the overall Bitcoin adoption. It may not be the kind of adoption some want, but it is what it is. Bitcoin doesn't discriminate market players.

But it's too much to say these financial products have become the main driver. There's probably just around a little more than a million Bitcoin that's into ETFs. That's just around 5% of the entire supply. The latest numbers clearly suggest most Bitcoin remain in the hands of individual owners.

[Ayers]

ETFs play a big role in the market. More than a hundred billion worth of Bitcoin in USD is into ETFs. Not to mention that these products are offered by the top investment firms and wealth managers in the world. So, you can't underestimate the impact of ETFs in the Bitcoin market. But it's not like ETFs aren't part of adoption. They're part of the overall Bitcoin adoption. It may not be the kind of adoption some want, but it is what it is. Bitcoin doesn't discriminate market players.

But it's too much to say these financial products have become the main driver. There's probably just around a little more than a million Bitcoin that's into ETFs. That's just around 5% of the entire supply. The latest numbers clearly suggest most Bitcoin remain in the hands of individual owners.

Many people wait for ETF approval before investing, but they do not invest in bitcoin that way. Many wait for ETF approval before investing simply because they want more certainty and peace of mind. Then, they invested in bitcoin in their own way.

From my observations since the ETF was approved, bitcoin has received more promotion in mainstream media and attracted more attention.
Previously, some people around me were not interested in bitcoin even though they had heard about it. But their views on it gradually changed after learning that the US had approved ETF.

Therefore, it is not entirely fair to say that it was not a major driving force in the recent bull market.
For my part, I believe that ETF have played a large, perhap even the most important, role in the recent bull market.

[shinratensei_]

ETF flow is only around 1-2% of bitcoin global volume, we aren't relying too much on ETF for bitcoin growth but ETF could bring in fresh inflow of institutional capital.
A good inflow means an institutional is investing in bitcoin and a fresh capital to the market is a good news. In reality even if there is no inflow, bitcoin still going to have a new all time high although the ETF increased to hype.

So it's not a strange thing for people to anticipate ETF and watching the outflow & inflow daily. It's a sign that institutional are bullish when inflow suddenly surge hence the bullish sentiment.
But overall, not really something that we can rely on because bitcoin is already big even before ETF.

[colinistheman]

ETF flow is only around 1-2% of bitcoin global volume, we aren't relying too much on ETF for bitcoin growth but ETF could bring in fresh inflow of institutional capital.
A good inflow means an institutional is investing in bitcoin and a fresh capital to the market is a good news. In reality even if there is no inflow, bitcoin still going to have a new all time high although the ETF increased to hype.

So it's not a strange thing for people to anticipate ETF and watching the outflow & inflow daily. It's a sign that institutional are bullish when inflow suddenly surge hence the bullish sentiment.
But overall, not really something that we can rely on because bitcoin is already big even before ETF.

Do you have any data to prove that capital flows into ETFs only account for 1-2% of total global Bitcoin volume? Because total Bitcoin ETF asset have reached $102 billion, equivalent to 6.5% of Bitcoin's market cap. So, I think that number is too low and inaccurate.
As some have pointed out, bitcoin experienced growth before ETF approval. That means it could still continue to rise even without capital inflows from ETF, and I agree with that. However, people forget that the more mature Bitcoin becomes, the more capital it needs if it wants to grow strongly. In your opinion, if ETFs are not approved and WS does not invest, where will we get the massive amount of capital, hundreds or even trillions of dollars?

In my opinion, Bitcoin's growth in each cycle is always a combination of many factors. But I cannot deny the importance of ETFs because the truth is the flow of money into the market through ETFs is currently is larger than any other channel.

[Fivestar4everMVP]

Lately I see many people talking about Bitcoin ETFs and how they are moving the market. It’s true they bring new money. Big investors can buy Bitcoin easily through ETFs without using exchanges or wallets. That makes it easier for funds and institutions to enter. We can also see that on days when ETF inflows are strong, price often moves up quickly. And when inflows slow down or turn negative, the market also becomes weaker. So in the short term, ETFs clearly have an impact .
But I feel like people are focusing on this too much. Before ETFs, Bitcoin was already growing. It moved because of adoption, halvings, and overall market cycles.
Another point is that ETF demand can change depending on market conditions. If the economy becomes uncertain, flows may slow down. Also, ETF buyers don’t really use Bitcoin, they just get exposure to the price. For me, ETFs are important, but not the only factor. Long term value still depends more on adoption, network strength, and trust.

What do you think 
Are ETFs the main driver now, or just one part of the bigger picture?

Well, I definitely will not want to say or even believe that ETF has done bitcoin no good, because of course it came with its own level of recognition and adoption to bitcoin, and has over time had a positive impact on the price of bitcoin.

But I just and still feel that bitcoin would have been better off without the ETF, I feel that before the ETF, money rotated more into the actual bitcoin and crypto in general than right now that investors seems to be focusing on buying ETFs instead of the main bitcoin, thereby reducing money that should be circulating in the bitcoin market through fees and other vices.
Imagine that all of this investors currently buying bitcoin through ETFs were actually buying the direct bitcoin completely cutting off all middle men, I feel bitcoin will be doing better than it's currently doing because then, growth will be more organic than it appears programmed, ETF opened bitcoin price up to some serious manipulation by the ETF companies.

[Alpha Marine]

Bitcoin got to $69k on its own without an ETF, so even though ETF has an impact, it is not the only thing that controls the market. Most times, people exaggerate or underestimate the impact of certain things on Bitcoin. It happened with Trump from when he won the election until he was inaugurated. People made it seem like Bitcoin was dying, and he is the saviour. I don't think many people feel that way about ETF, and they already know that ETF are not the main drivers of the market.

In fact, I believe EFT reacts after the market has shown movement. Most times, there is buying or selling pressure when the market has shown signs that it is about to go either way. So ETF cannot be the main drivers, although, they are part of the big part of it.

[Akbarkoe]

Bitcoin got to $69k on its own without an ETF, so even though ETF has an impact, it is not the only thing that controls the market. Most times, people exaggerate or underestimate the impact of certain things on Bitcoin. It happened with Trump from when he won the election until he was inaugurated. People made it seem like Bitcoin was dying, and he is the saviour. I don't think many people feel that way about ETF, and they already know that ETF are not the main drivers of the market.

In fact, I believe EFT reacts after the market has shown movement. Most times, there is buying or selling pressure when the market has shown signs that it is about to go either way. So ETF cannot be the main drivers, although, they are part of the big part of it.

They forget that we can reach the $69k mark without ETFs, even when ETFs I believe that Bitcoin will print new ATH again, and from the past institutions have also entered bitcoin it's just that they didn't enter through ETFs I believe in that, only when this ETF is available it cannot be denied that it contributes to the growth of money going into bitcoin and some institutions that enter independent channels with the ETF they enter through ETFs. CMIIW

I see it the same way in market polarization, it's always been that way.

[d5000]

Bitcoin got to $69k on its own without an ETF

Just for completeness: The first Bitcoin based ETFs were actually approved in 2021. There was one in Canada, one in Brazil and one in a British overseas territory.

I think they did have influence in the bull run in 2021, but they were much less one of the main factors than in 2024, because of course the US market is much more important. But also in 2024 I think the ETFs were only the main driver in a short period, basically it was a "buy the rumours" event. When the ETFs finally launched, the rally continued a bit more but then waned because the inflows were still rather weak.