There’s something special that happened in January 2024. After years of hope and pain, the US Securities and Exchange Commission (SEC) approved the first nine spot Bitcoin ETFs. When this approval went through, Bitcoin, and by large, crypto as an industry, ushered in a new era.
No longer will Bitcoin and, by extension, some of the best cryptos to buy, be shaped by the whims of retail traders. Spot Bitcoin ETFs are regulated by the SEC, and that means institutions, often managing billions, if not trillions of investor funds, were free to dabble with the otherwise risky Bitcoin.
The reception was immediate and positive for Bitcoin and the entire crypto space. Not only did the Bitcoin price tick higher, soaring back towards the $70,000 level, a key resistance zone then, but institutions, almost immediately, started scooping up Bitcoin, channeling billions directly to the digital gold.
Since then, and thanks to changing regulations that are now more favorable to crypto, including top Solana meme coins, the total crypto market cap has spiked to over $3T. What’s more? The Bitcoin price is trading way above 2021 and 2024 highs, changing hands at nearly $90,000 when writing. Looking at solid trading numbers, it is still interesting to see that institutions have completely overwhelmed retailers and are the primary dictators of how fast or sticky crypto prices are.
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The Expanding Bitcoin Liquidity Gap: Bitcoin Price Shaped By The Big Boys?
In trading, liquidity is everything. Regardless of the asset in question, prices always search for liquidity, and this is no different in the BTC USDT. As long as prices tick higher, it means there are more buyers than sellers, and liquidity is increasing in favor of bulls. What this means is that it is easier to load up more Bitcoin without causing wild price swings or volatility. Oftentimes, the uptrend momentum fizzles when buyers’ attempt to scoop up more coins causes prices to gap down, not up.
Present data shows that the big boys, mostly institutions, are buying more BTC through registered vehicles at a faster pace than retailers. While it is also true that their redemption of spot Bitcoin ETFs during periods of bear pressure accelerates the downtrend, over the months, their buying impact has been visible to everyone.
Presently, spot Bitcoin ETF issuers manage over $115B of BTC for various institutions. The number is only expected to rise as Bitcoin finds adoption because spot Bitcoin ETFs let investors buy Bitcoin exposure through a regular brokerage account. This means there is no need for wallets or the daunting tasks of managing private keys.