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Bitcoin Fund Holdings drop to 2021 lows; What’s next for BTC?

Bitcoin Fund Holdings drop to 2021 lows; What’s next for BTC?

Although the second half of 2023 was marked by growing discussions and positive expectations regarding spot Bitcoin ETFs, September 5 registered the lowest amount of Bitcoin (BTC) being held by trusts, ETFs, and funds since February 2021.

Notably, the ‘Bitcoin Fund Holdings’ metric by CryptoQuant also seems to be slightly correlated to BTC price — but in a correlation gap that starts to increase as funds are getting rid of their coins, and the price remains stable.

Data retrieved by Finbold shows the total amount of 685,271 BTC ($17.54 billion) held by funds, ETFs, and trusts on September 5. This metric peaked in May 2021 at 740 thousand coins and suffered a huge drop in June 2022, with the bear market getting tougher.

Bitcoin: Fund Holdings — All Symbol, in correlation with BTC price. Source: CryptoQuant
Bitcoin: Fund Holdings — All Symbol, in correlation with BTC price. Source: CryptoQuant

Since then, the amount of Bitcoin Fund Holdings steadily dropped in a downtrend, even with the BTC price recovery in June 2023 — which opened a gap of huge divergence between these two metrics that were highly correlated in the last two years.

This divergence could mean that either:

  1. Bitcoin price will drop to meet the amount held by funds;
  2. These entities will start a new accumulation phase, so their holdings can meet the positive price performance for BTC.

Interestingly, the last time Bitcoin Fund Holdings registered these low values was in early 2021. However, before 2021, there weren’t as many funds, ETFs, and trusts as we have nowadays — being the year mostly marked by high levels of institutional adoption of BTC.

Adoption by financial institutions was also one of the main generators of demand that fueled 2021’s bull market for the leading cryptocurrency.

With a growing circulating supply, Bitcoin must be able to constantly find more demand in order to revisit past price performances. Curiously, BTC would trade at $66,838, if Bitcoin ever reaches its all-time high market cap from 2021 — which is $2,207 (3.19%) less than its price all-time high in US dollars.

Bitcoin is trading at $25,600 by press time.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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