Key Points:
BTC demand has fallen below daily mining supply for the first time in seven months.
Since October 11, the net outflow of spot BTC ETFs has reached $1.67 billion.
The trading price of BTC treasury companies is below net asset value, indicating a weakening of confidence, which may further pressure BTC prices.
According to a report by an analyst, institutional demand for BTC has dropped below daily mining levels, raising serious concerns about BTC's long-term stability.
Charles Edwards, head of Capriole Investments, pointed out that although BTC mining output remains relatively stable, the demand from institutional buyers has "fallen below daily mining supply for the first time in seven months."
Edwards shared a chart that tracks key BTC metrics related to three types of institutional activity: BTC mining volume (red), spot ETF and similar institutional purchases (light green), and BTC digital asset treasury (DAT) corporate activity (orange).
The total amount of BTC purchased by institutional investors is represented by the blue line.
Analysis shows that since mid-August, the demand for DAT and ETFs has been on a stepwise decline, with total demand falling below daily mining supply on November 3. The last time institutional demand was below daily mined BTC was in March.
Initially, the subsequent inflows into spot BTC ETFs compensated for the reduced corporate pressure, thus maintaining the overall level of institutional demand.
After the market crash on October 11, demand through spot ETFs also began to shrink sharply. Since then, these investment products have seen a net outflow of $1.67 billion.
On October 31, spot BTC ETFs recorded a total of $191 million in daily net outflows, with all 12 ETF products not recording any inflows.
This phenomenon indicates that after a significant accumulation through traditional market tools earlier this year, institutional willingness to invest in BTC has clearly weakened.
Edwards expressed his concerns: "To be honest, this has been the main indicator keeping me bullish over the past few months, while other assets were performing better than BTC," he further added:
Meanwhile, BTC's upward momentum has noticeably cooled, with prices retreating to around $107,000 after hitting an all-time high of over $126,000 on October 6.
From a macro perspective, the market has been consolidating within a broad range above $105,000 since July, clearly reflecting the fierce competition between bullish and bearish forces.
Industry experts point out that the DAT trend, initially driven by Strategy, is essentially based on the traditional financial concept of borrowing fiat currency to purchase BTC.
"There are currently 188 treasury companies in the market holding large amounts of BTC but have not established effective business models," Edwards emphasized in his analysis.
In fact, the DAT trend is essentially a bet on the continuous rise of coin prices, aiming to gain capital gains through price increases. The market value to net asset value (mNAV) ratio is widely used as a key indicator to assess the valuation of companies holding BTC as treasury assets.
Financial analysts explain that a higher mNAV typically indicates that investors are giving a premium based on the company's future growth potential, while a lower mNAV may suggest market concerns about the company's debt or other potential risks.
Recent data shows that the NAV of BTC treasury companies has significantly declined, leading to the evaporation of billions of dollars in paper wealth.
Market observers believe that if this trend continues, it may further erode the market premium enjoyed by these companies, as declining institutional demand often means weakening market confidence, which in turn may exacerbate selling pressure in the market.
Cointelegraph noted in its report that the rebound potential for BTC prices will continue to be limited until spot ETFs and institutional investors led by Strategy resume large-scale buying actions.
Related: Bitcoin (BTC) price rises to November high of $111,000, but the market remains shrouded in bearish concerns.
This article does not constitute any investment advice or recommendation. All investment and trading activities carry risks, and readers should conduct their own research before making decisions.
Original article: “Not Good” Price Signal: Bitcoin ETF Demand Begins to Lag Behind Newly Mined BTC Supply
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