Transcription
Hello, it's Crito and I hope you are doing well. We are going to answer an essential question regarding Bitcoin. How is it that despite the injection of liquidity, 70 billion dollars into Bitcoin ETFs, we only see BTC struggling to regain the 1200 dollars mark? How is it that with all this money that has been injected, all this news we have, all this truly Trump-esque aspect around cryptocurrencies, we are only at 120,000? What is concretely happening? And you will see that we are going to truly ask ourselves the question: is it really Wall Street money that is arriving, or are we not seeing a completely different phenomenon taking place which could, moreover, jeopardize on-chain analysis and show that we have a totally different market?
We will start by analyzing this graph which is, for me, primordial, which is the representation here of monetary flows in ETFs, which are the blue waves we find in this entire area. And we see that on average over the last 20 days, 4.6 billion dollars have been injected. When we look here at the small dotted lines regarding the price, it's when we compare the general state of all the order books, meaning the money that has been directly injected into exchanges, and when we add the liquidity injections that we found in the different ETFs, we have an expected price, meaning the price we should expect for BTC, and we see that we should be around 128,000 while we are around 115,000. Why is there such a large gap? And when we look at the expectation and therefore the upper ratio, we would be around 140,000. That is to say, when we look at the deviations, if we are in a positive deviation, meaning if we were in a BTC overpricing, we would be around 1400. How is it that we are in an underpricing of the price below 120,000 dollars?
And that is the question we will try to answer today because the reality is that a lot of money has been injected, really a lot of money. ETFs represent 721,000 BTC since their launch, so since January 2024, which have been injected. This is net flow. So it's truly the liquidity injection. This represents 6.72% of the total current Bitcoin supply. And this has been bought in less than 2 years. And despite this, we went from a price of 40,000 to 120,000 and we are struggling to exceed 1200. And when we add all the companies that own BTC, what we call here Bitcoin Treasury Companies, we see that there is a huge injection of liquidity. Strategy 6400 BTC, we will have more than 4 million Bitcoins including, of course, ETFs, but 4 million Bitcoins is enormous out of the 19 million currently available. How is it that despite this enormous liquidity injection, we don't have a price movement as powerful as we should have? Why? We are even below this blue curve that we find there, which is the underpricing of the priced BTC if we were to take into account all the ETFs. Why is there such a gap?
Well, for me, it comes from two things and it will be very important to understand it. So I will try to explain it very simply. The first thing will be an institutional market. Institutions use ETFs as one leverage among many others, and notably what they like to do is what is called "cash and carry". Cash and carry is the act of being able to capture a difference between futures and the spot price. What is the spot price? It's the price of ETFs. It's the way for an institution to buy Bitcoin. Very simply, the price of the perpetual will be here, for example, the CME, and the difference between the two is what they will be able to buy. Historically, we have always had a very strong difference, and recently, notably with the drop in early 2025, we see that this difference has greatly decreased. And to transpose it, it's quite simple. We will put the CME in blue here and the total index in green, for example. And when we see the two curves decorrelate, it implies that there will be a price difference, and this price difference will be exploited in the case. And that means that we will find ourselves with actors who might buy BTC on spot but who will, on the contrary, perhaps open a short on the CME and thus cancel part or all of the liquidity injections. So that means that perhaps out of the 721,000 BTC that are bought, maybe 50% of these Bitcoins are actually injected into liquidity. And unfortunately, we have no way of tracking this. And this could be one reason. The first reason for the lack of such impact.
It could also be related to treasuries. Unfortunately, we have no way of knowing what shorts are being executed for hedging on the different strategies being implemented. We know that MicroStrategy, Michael Saylor, Strategy B do not do it. So that's a good thing. But what about the rest? That leaves 6400 BTC out of 4 million, which is a significant gap, and we have no way of knowing this at the moment. However, we know that this is something that is frequent. We know that cash and carry is something that is used absolutely everywhere by institutions and which could explain why this monumental liquidity injection, it is truly a monumental liquidity injection, has not made BTC move more. So at the time of launch, which was in January 2024, we were around 45,000 dollars for BTC, and now at 115,000 dollars. Such a liquidity injection, even on a market cap as large as BTC, should have resulted in a valuation of over 150,000 for Bitcoin, and yet this is not the case.
Does this suffice to explain all of this? For me, I don't think so. I think there is another change, and it is very important. It's a change in ideology and a change regarding the OGs. OGs are the old-timers who bought crypto, and what is happening historically? When you wanted to buy crypto, and especially Bitcoin primarily, you were forced to hold it yourself. Bitcoin had no choice, there were no exchanges, and even those who dabbled with exchanges like, for example, Mt. Gox or FTX, are still regretting it, and many were ruined by it. And the reality is that now many are either in self-custody, meaning they keep their BTC themselves, but it remains very difficult when you have several billion dollars in Bitcoin, or a portion are slowly moving towards ETFs, and that is a reality. The veterans of the network are gradually moving towards a form of institutionalization, and we are not seeing them dump, make sales, but rather transfer part of their liquidity to ETFs. And unfortunately, we have no proof of this. This is truly a hypothesis that we have already seen, which has been partially confirmed for at least 3 billion dollars, that a portion of the OGs are moving towards ETFs. We know that Coinbase has helped many people do this, but we have no figures. We just know that it is a reality and that it is something that has already happened and that we saw at the launch of the BTC ETF, and that we are perhaps seeing without necessarily being able to truly trace it.
And here is this graph. We see that the purple part is the Grayscale ETF at the time, which was a trust and became an ETF. People left Grayscale, and it was slowly cannibalized by BlackRock bit by bit. There is a whole part that has come out. We clearly see that the purple movement is slowly falling to less than 175,000 BTC, whereas historically they had 216,000, and the majority have been cannibalized by the other ETFs. This is something that allowed BlackRock's ETF to break all records. But it's mainly thanks to our friend Grayscale and all the people who were stuck in Grayscale who actually changed their vehicle. And perhaps this is also what we are seeing today. But again, we have no way of seeing the gap that we see between the two. If it turns out that what we systematically confirm as liquidity injections are simply a form of purchase or transfer by OGs who are selling their BTC to, here, potentially, simply convert them into ETFs, or who are validating with large players like Coinbase a transfer of liquidity between their holdings and the creation of ETF shares to manage them more easily. And this is a real change.
And the question we are asking ourselves is: have ETFs not truly signaled the end of self-custody? When we see the risks of self-custody, whether it's loss, hacking, kidnappings, or physical risks that we can have, what is the effective gain we can have by holding millions or billions of dollars in BTC when potentially, we can hold them in the form of an ETF that we can even collateralize in the form of a loan? And this is something we see absolutely everywhere, and at some point, it's a real question we must ask ourselves. It's a form of protection, and it's certainly putting an end to a representation we had. And here, I will return to this representation. It's from the point where we are unable to determine the flows. How can we determine if there are liquidity injections or not? Yes, we have a way to see that there are many institutions in ETFs. When we look, particularly on Bloomberg terminals, at the composition of the actors holding ETF shares, we see these types of actors, but at what point are we able to link the Bitcoin address tracked by people doing on-chain analysis with the official name of the holder in the ETF? Unfortunately, we have no way of making that link. And this is perhaps also the limit of on-chain analysis.
What will happen if in the coming years the majority of BTC users and holders do not use on-chain, self-custody, but go through ETFs? Well, at that point, on-chain analysis will no longer exist and will have much less weight, much less weighting. And that's why I think the breakthrough, the real breakthrough of ETFs that we have seen in terms of price, their arrival, is the arrival of institutional investors and especially a new methodology that we can see through cash and carry and certainly other tools that will be built on top of BTC, but also a modification of the OGs, those who were there before and who held BTC, who are changing their methodology, and a decrease in the impact of on-chain analysis certainly in the coming years. This doesn't mean it's happening today, but it means that if we are truly heading towards ETF only, unfortunately, on-chain analysis will disappear from the vision of different trends and will unfortunately be obscured by ETF ownership. And that is not on-chain. In any case, for now, I hope you enjoyed this video. If so, don't forget to like, share, subscribe, and join us directly on the free Telegram in the comments in the description. You will have lots of insights, voice notes, training, and content in addition to YouTube, it's free. It's in the comments in the description, and I'll see you very soon. [Music]