Key Points
Samson Mow, a crypto project developer and founder, believes the stability of the current Bitcoin price is due to the launch of spot Bitcoin exchange-traded funds (ETFs) in the United States.
He argues that these ETFs have helped prevent a significant price drop.
The Impact of Spot ETFs on Bitcoin
Without the capital from spot Bitcoin ETFs, Mow suggests that Bitcoin could have dropped by 10-20%, potentially going below $40,000.
As of his writing in mid-February, derivatives have injected billions into the Bitcoin market, boosting liquidity.
Liquidity and volatility have a complex relationship, especially in the crypto and Bitcoin markets.
In general, more buyers and sellers, or traders, mean more circulating capital and increased liquidity.
Liquidity is essentially a measure of how easy it is to trade.
In an illiquid market, there’s less circulating capital, making it harder to swap assets.
Since the launch of spot Bitcoin ETFs, billions have been funneled into the market, according to Lookonchain data.
As of February 18, BlackRock purchased over $96 million worth of BTC through its ETF product.
There’s a consensus that Bitcoin is now more liquid, a point Mow agrees with.
According to CoinMarketCap data, Bitcoin commands over 50% of the total market cap, with the value of all circulating coins, including irrecoverable ones, standing at over $1 trillion.
Mow highlights that Bitcoin’s increased stability could attract more investors.
Typically, institutional-grade investors seek stability, a characteristic Bitcoin now exhibits.
However, increased liquidity could result in Bitcoin being less volatile, making it less attractive for speculators.
The Bitcoin price daily chart shows the coin is within a tight range but is bullish.
After briefly retesting $53,000, the coin cooled off to spot rates but found support around $50,500.
If the uptrend holds, the coin could reject lower lows and break above $53,000, potentially leading to a rise towards $70,000.
Analysts are also considering the upcoming Bitcoin halving as a possible accelerant.
However, it remains to be seen if this will be the case.
Despite its increasing liquidity, Bitcoin is still a new asset class, and the global market is still adapting.
More institutions are likely to adopt the asset as they diversify their portfolios.
