In recent years, there has been a growing interest in cryptocurrencies, with many corporations adding Bitcoin to their assets. But how significant is this influence on the market?
Why Bitcoin ETFs Are More Significant?
K33 analysts investigate the differences between Bitcoin ETFs and treasury companies, noting that ETFs create demand faster in the market. Their asset acquisition methods differ: ETFs use a cash creation model, generating new demand for Bitcoin, whereas treasury companies often employ in-kind swaps that may not create new demand.
The Dilution Effect: Institutional Adoption's Influence
The number of companies holding Bitcoin is increasing, leading to a dilution of the impact of each individual purchase on the market. This contrasts with the idea that every new Bitcoin purchase has a significant influence on its price. The impact size is diluted by a larger number of participants.
What This Means for Your Investment Strategy?
It's crucial to distinguish the impact of Bitcoin ETFs and treasury companies when building investment strategies. Monitoring ETF flows can provide more accurate signals for price movements. While treasury assets may not have immediate influence, they are important for the long-term assessment of Bitcoin's reliability as an asset.
The research highlights the importance of understanding the mechanisms of institutional adoption of Bitcoin in the market. ETFs play a key role in its price, while treasury companies provide support for long-term strategy.
