ETF Volume Could Sustain Bitcoin Upward Momentum

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The Bitcoin [BTC] market has experienced significant volatility over the past few days, causing much speculation about the future of the coin. However, one positive thing is that the trading volume of Bitcoin ETFs has increased, demonstrating continued interest from investors.

The latest information from ETF analyst, Eric Balchunas, states that 10 Bitcoin ETFs have recorded large trading volumes, up to 10 billion USD during the day, surpassing the previous record just in the past week. Balchunas emphasizes the correlation between price volatility and trading volume in ETFs, and he doesn’t shy away from these impressive numbers.

ETF volumes paint a nice picture

ETFs such as IBIT, FBTC, BITB and ARKB have all set records for the number of trading days, while the short-term Bitcoin ETF, BITI, also surpassed the previous record by a significant margin. Balchunas predicts interest will increase when 2x and -2x spot BTC ETFs are introduced, predicting that a large number of investors will gravitate towards these offerings.

Source: X

Notably, both BITO and BITX also broke their records, highlighting the unexpectedly positive impact of interest in futures ETFs. Balchunas, while admitting the spillover effects are difficult to measure and suggesting a reassessment of the situation in a year, said at the time of writing the enthusiasm around ETFs remains clear.

However, ahead, there are still challenges to overcome. Regardless of the heightened interest in ETF trading volumes, BTC’s recent volatility could still have a negative impact on sentiment around Bitcoin.

Barrier ahead

Source: Coinglass

In just the last seven days, BTC price moved from $69,000 to $61,333 before starting to recover. As of the time of writing, BTC is trading at $67,074.51. Large price fluctuations can have a negative effect on the perception of Bitcoin, especially for traders who have recently entered the market.

Additionally, on March 4, a total of 249.24 million USD was liquidated, with 90,403 transactions settled, with BTC accounting for 75.96 million USD of this total. Liquidations due to sudden price movements can create an impact on traders’ bullish sentiment and can lead to reduced liquidity in the market.

Although this problem exists, overall, Bitcoin’s ecosystem is still doing relatively well. Analytical data from Santiment shows that daily activity on the Bitcoin network is increasing, mainly due to a surge in interest in Bitcoin NFTs.