Bitcoin spot ETFs allow investors to trade through traditional financial markets rather than directly on the blockchain. This will cause some Bitcoin transactions to be conducted off-chain, reducing the representativeness of on-chain transaction data.
At the same time, the Bitcoin holdings of ETFs are usually concentrated in custodians, and these Bitcoins may not move for a long time, thus affecting the accuracy of indicators such as the number of active addresses and on-chain transaction volume.
There is a certain correlation between the number of active Bitcoin addresses and prices, as shown in the figure below. However, since the beginning of this year, Bitcoin prices have fluctuated greatly, but the number of active addresses has shown a downward trend (marked in the red box). This trend may reflect the impact of some trading activities shifting off-chain after the listing of Bitcoin spot ETFs.
After the listing of spot ETFs, some liquidity may shift from cryptocurrency exchanges to traditional financial markets, which may lead to a decline in on-chain transaction volume and liquidity, making the analysis of market sentiment and price trends less accurate. The data in the figure below shows the recent changes in net inflows of Bitcoin spot ETFs.
Spot ETFs provide a simpler and regulated way to hold Bitcoin, attracting a large number of traditional institutional investors to the market. These investors usually do not conduct frequent on-chain transactions, changing the characteristics of on-chain data. In addition, institutional investors tend to hold Bitcoin for a long time, which reduces short-term trading volume and affects the activity of on-chain data.
If more and more investors turn to holding Bitcoin through ETFs in the future instead of directly purchasing and holding actual Bitcoin assets. This may lead to a decrease in on-chain trading activities, making it impossible for traditional analysis methods that rely on on-chain data to fully reflect the market situation. Specifically:
Decrease in trading volume: The decrease in on-chain trading volume leads to distortion of indicators related to trading volume.
Decreased address activity: The number of active addresses has decreased, affecting the judgment of market participation.
Distortion of liquidity data: Some funds have been transferred off-chain, and on-chain liquidity indicators cannot accurately reflect the actual liquidity of the market. #山寨季何时到来？ #以太坊ETF批准预期
