Cryptoquant Report Uncovers ETF Activity and OTC Supply Dynamics Fueling Bitcoins Journey to AllTime Highs

Bitcoin is edging closer to its highest-ever value, propelled by a surge in demand for exchange-traded funds (ETFs), according to an analysis from Cryptoquant. The cryptocurrency's price is currently hovering around $71,800 to $72,000, driven by a significant increase in ETF purchases. In October, net ETF purchases rose from -1,300 BTC to 5,800 BTC, with a peak of 7,700 BTC recorded on October 13. Despite the availability of more bitcoin for ETFs to buy on over-the-counter (OTC) desks, the price of bitcoin has continued to rally. Cryptoquant estimates that there is approximately 416,000 BTC available on OTC desks, compared to a daily balance of 183,000 to 193,000 BTC in the first quarter of 2024. This surplus allows ETFs to source bitcoin without impacting the price directly. However, the share of OTC inventory represented by ETFs' daily purchases has decreased since early 2024, indicating that further demand is needed to significantly reduce OTC bitcoin supplies. Additionally, the growth rate of bitcoin holdings on OTC desks has slowed considerably since mid-2024. Over the past 30 days, OTC desks have only increased their holdings by 3,000 BTC, compared to 77,000 BTC in August and 92,000 BTC in June. This decline, coupled with decreasing daily inflows to OTC desks, which now average 90,000 BTC, has led to the lowest inflow levels seen this year, a 52% drop from the average in the first nine months of 2024. Cryptoquant suggests that these factors may put upward pressure on bitcoin's price as supply decreases amidst increasing demand. Overall, Cryptoquant's research indicates that bitcoin's potential to reach its all-time high depends on sustaining or increasing ETF demand. While current dynamics in OTC supply have limited the direct impact of these purchases on the market, continued or rising demand could gradually deplete OTC reserves. This analysis points to a market poised for further growth, contingent on the balance between ETF acquisition rates and available OTC inventory.