QCP Capital cautioned that Bitcoin exchange-traded fund (ETF) inflows could trigger a supply squeeze and heightened volatility in cryptocurrency markets during late 2024. The firm highlighted that institutional demand via ETFs also impacted Ethereum and broader digital asset markets.
Significant Bitcoin ETF inflows, particularly into BlackRock’s iShares Bitcoin Trust, reduced Bitcoin’-market-market supply, creating potential scarcity conditions. BlackRock’s iShares Ethereum Trust simultaneously held approximately 1.5% of all ETH, establishing ETF flows as a critical market indicator.
Equity markets contributed to the backdrop with a ‘melt-up’ rally that saw S&P 500 and Nasdaq 100 indices reach record highs, influencing crypto market sentiment. Geopolitical tensions, including impending trade deal deadlines, additionally threatened global economic stability and crypto asset performance.
Institutional accumulation through ETFs fundamentally reshaped supply-demand dynamics, potentially amplifying price movements across cryptocurrency markets during the third and fourth quarters of 2024.