**Bitcoin Approaches Record High as ETF Demand Grows, Reports Cryptoquant**
Bitcoin is nearing its historic peak, trading between $71,800 and $72,000 as of late October, primarily fueled by a notable surge in demand from exchange-traded funds (ETFs), according to a recent analysis by Cryptoquant, a prominent cryptocurrency analytics firm. In October, net purchases of Bitcoin by ETFs surged dramatically from -1,300 BTC to 5,800 BTC, with a remarkable single-day peak of 7,700 BTC recorded on October 13.
The report indicates, “Bitcoin’s price has surged even amidst an increase in supply available for ETFs to acquire from over-the-counter (OTC) desks compared to the beginning of the year.” Cryptoquant estimates that approximately 416,000 BTC is currently held on OTC desks, contrasting with a daily inventory of 183,000 to 193,000 BTC anticipated in the first quarter of 2024.
Cryptoquant’s analysis further elaborates:
The elevated balances on OTC desks facilitate ETFs in sourcing Bitcoin without necessitating purchases on exchanges, thus minimizing any immediate impact on market prices.
The analysts from Cryptoquant highlight that the daily purchases made by ETFs now account for a smaller portion of the OTC inventory when compared to early 2024. This suggests that a notable increase in demand would be required to significantly deplete the available Bitcoin in OTC reserves. Additionally, Cryptoquant observes a substantial slowdown in the 30-day growth rate of Bitcoin holdings on OTC desks since mid-2024.
Currently, OTC desks have only increased their holdings by 3,000 BTC over the past month, a stark decline from the increases of 77,000 BTC in August and 92,000 BTC in June. This slowdown in growth, combined with diminishing daily inflows to OTC desks—now averaging 90,000 BTC—marks the lowest inflow levels witnessed this year, representing a 52% decrease from the average recorded in the first three quarters of 2024. According to Cryptoquant, these elements could create upward pressure on Bitcoin’s price as supply diminishes in light of rising demand.
In summary, Cryptoquant’s research underscores that Bitcoin’s ability to breach its all-time high depends heavily on the sustainability or growth of ETF demand. While current trends in OTC supply have mitigated the immediate effects of these purchases on the open market, consistent or increasing demand may gradually deplete OTC reserves. The findings from Cryptoquant illustrate a market poised for continued expansion, reliant on the equilibrium between ETF purchasing rates and available OTC inventory.
