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Bitcoin Price Tumbles Amid VanEck ETF’s Volume Surge: What Happend?

Bitcoin experienced a tumultuous day yesterday, with its price briefly touching $53,000 before plummeting to a low of $50,820. Amid this price volatility, an unexpected phenomenon caught the eye of market analysts: a dramatic surge in trading volumes for certain Bitcoin ETFs.

Bloomberg’s Eric Balchunas provided a detailed account of this anomaly on X, particularly focusing on the VanEck Bitcoin ETF (HODL) and its astonishing increase in trading volume. He remarked, “HODL is going wild today with $258m in volume already, a 14x jump over its daily average, and it’s not one big investor… but rather 32,000 individual trades, which is 60x its avg.”

This level of activity was not only unexpected but also unprecedented, sparking widespread speculation and analysis within the financial community. The unusual trading volume wasn’t isolated to HODL alone. Wisdom Tree’s Bitcoin ETF (BTCW) and BlackRock’s Bitcoin ETF (IBIT) also saw significant upticks in trading activity, albeit to varying degrees.

Balchunas pointed out, “BTCW also popping off, $154m trades, 12x its avg and 25x its assets via 23,000 indiv trades.” However, he noted that the volume increase in IBIT, while elevated, did not reach the “extraordinary levels” observed in HODL and BTCW.

What’s Behind The Sudden Spike In Bitcoin ETF Volumes?

Addressing theories that the ETF volume surge was driving Bitcoin’s price drop, Balchunas offered a rebuttal, “To the ‘bruh volume must be selling bc btc is dumping’ crowd: a) that makes no sense given how little these ETFs had in existing aum/shareholders b) plus you never see ton of outflows in brand new ETF that is in rally mode c) there are so many other holders of btc besides ETFs! d) how can you call it ‘dumping’ when it is down 1% after 20% rally in two weeks?”

However, the source of this sudden and explosive increase in trading volume remains a mystery, with Balchunas speculating, “Still haven’t figured out what happened. No one knows. Given how sudden and explosive the increase in number of trades was… I’m wondering if some Reddit or TikTok influencer type recommended them to their followers. Feels retail army-ish.”

He also considered the possibility of market makers trading among each other but found it an unlikely explanation given the liquidity of other Bitcoin ETFs like IBIT and BITO.

The trading day concluded with “The Nine” achieving a record-breaking volume day, thanks to significant contributions from HODL, BTCW, and BITB, which all shattered their previous records. Balchunas highlighted the significance of this trading volume, stating, “For context $2b in trading would put them in Top 10ish among ETFs and Top 20ish among stocks. It’s a lot.”

Turnover / trade volume of the spot Bitcoin ETFs

As the dust settles on this unprecedented day of trading, the Bitcoin community continues to grapple with the implications of this volume surge on Bitcoin ETFs and its potential impact on the market. The exact catalyst behind this phenomenon remains elusive, with analysts and investors alike keenly awaiting further developments.

At the time of going to press, BTC fell below the $51,000 mark again and initially found support at the EMA100 on the 1-hour chart.

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Bitcoin HODLers Grows As Significant Supply Remains Locked

Despite a larger portion of Bitcoin’s total supply being “inactive” for over a year, recent data revealed impressive growth in investors holding on to their BTCs during the rally.

Bitcoin HODLing Yawns For Growth With Lesser Supply

On Wednesday, November 15, a crypto analyst known as Root took to his official X (formerly Twitter) handle to share valuable data concerning Bitcoin. A yearly BTC supply chart also accompanied the analyst’s X post.

According to the analyst, a significant part of BTC’s total supply has been inactive for over a year. In addition, the inactive supply has recently reached an all-time high (ATH) of 69%. The analyst stated:

69%, an all-time high, of the #Bitcoin supply, hasn’t been active for over a year. Root stated.

This supply for one year or more is only a portion of a bigger group known as long-term holders (LTHs). One of the two major groups of Bitcoin investors comprises these LTHs, while the other is known as short-term holders (STHs).

Investors holding coins longer than five to six months are classified as long-term holders. Meanwhile, those who hold coins no more than this given time are classified as short-time holders.

In addition, even among LTHs, those who have passed the one-year mark would be considered “reliable gems.” However, this variety currently comprises the majority of the asset’s supply. This seems to have also increased significantly lately, as the graph indicates.

Bitcoin

According to statistics, holders are less likely to switch their coins any time the longer they are kept inactive. Due to this, the LTHs tend to be the most devoted segment of the market during periods of Bitcoin’s upsides or downsides.

Double Top Pattern Resurfaces Driving The Crypto To A Downward Trend

BTC has recently formed a double top pattern close to the $38,000 level, causing the token’s drop. The price has since fallen below the 100 hourly Simple moving average and the $36,500 mark.

 

However, it seems the bulls emerged at the $36,500 mark, giving the token momentum to sustain between $36,000 and $36,500. Following the formation of a low at $36,517, the price is currently correcting losses.

So far, there are no claims that the increase in Bitcoin HODLing has imparted the price growth of BTC. Nonetheless, this recent development sparks potential for the crypto asset over time if this continues.

Currently, the price of BTC is at $36,422 as of the time of writing, indicating a 2.94% decline over the past 24 hours. The asset’s 24-hour trading volume has also experienced an 8% drop, valued at $26,113,638,790, according to CoinMarketCap.

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