The ETC Group Physical Bitcoin (BTCE), a German investment fund, has been steadily reducing its Bitcoin holdings, according to recent reports from CryptoQuant. This trend has been observed since the launch of the Bitcoin Exchange-Traded Fund (ETF). It has drawn considerable attention from the crypto community. Historically, the exchange rate of the BTCE has closely mirrored the Bitcoin price movement and has been a predictor of such movements.
Recent Trends and Changes in Fund Behavior“The historical correlation between BTCE and the Bitcoin price has shown a consistent pattern, where changes in the fund’s reserves generally precede movements in $BTC price.” – By @joao_wedson Link https://t.co/59rWi28opD pic.twitter.com/bKRI4TfePP
— CryptoQuant.com (@cryptoquant_com) August 14, 2024
ETC Group Bitcoin Holdings Dip Below 17,000 BTC, Trend Shifts
For example, from 2020 to April 2021, BTCE managed to grow its Bitcoin holdings from 0 to 23,480 BTC, which was during the Bitcoin’s first high-voltage rally. When the fund expanded the quantity of Bitcoin that it owned, the price of BTC increased. On the other hand, when BTCE started to scale down its positions in Bitcoin in past, the price of Bitcoin was also down.
However, data starting from January 2024 showed that this trend has started to shift. The ETC Group’s Bitcoins also reduced from a high of 27,980 BTC to below 17,000 BTC at some point, as can be seen in the figure below. The figure shows continuous selling from ETC Group. However, this has cut down drastically considering that the previous years’ expectation of BTC price hike has not been as dominant as before. As a result, the typical association between BTCE’s reserve movements and Bitcoin price shifts does not hold as closely.
Source: CryptoQuant Bitcoin Price Rises Against BTCE Decline, Indicating Shifting Correlations
A 30-day variance shows that positive movements in the BTCE holdings were followed by a corresponding rise in the Bitcoin price while negative movements had led to a decline in the Bitcoin price. On the other hand, for the first time, the price of Bitcoin went up when BTCE was selling more of its holdings. This split indicates a change in the correlation between BTCE and the market trend of Bitcoin.
However, this development could point to shift in market forces or the existence of other forces outside the BTCE’s realm of influence. The decline in the remaining reserves of BTCE, as reported by CryptoQuant, and the lack of the same response in the Bitcoin price calls for a deeper study of these new market dynamics. Ultimately, monitoring BTCE’s activities and their impact on Bitcoin will be crucial for predicting future price movements.