Despite a fresh wave of investment flowing into U.S. spot bitcoin ETFs, the price of Bitcoin has struggled to gain momentum, highlighting a disconnect that analysts say may stem from how these funds operate.
Analysts at Bitfinex point out that while investors have directed roughly $1.4 billion into spot bitcoin ETFs over the past five days, the cryptocurrency’s spot price has remained largely range-bound. The situation, they argue, reflects how ETF inflows can sometimes be mistaken for immediate buying pressure in the underlying market.
In comments shared with CoinDesk, the analysts explained that the structure of ETFs can introduce a delay between investor demand and the actual purchase of bitcoin. As a result, inflows into these funds do not always translate into instant activity in the spot market.
Exchange-traded funds are pooled investment vehicles that hold an underlying asset—such as bitcoin—and issue shares that trade on stock exchanges like traditional equities. These shares are designed to track the value of the underlying holdings. Since the launch of 11 U.S. spot bitcoin ETFs in January 2024, the funds have collectively attracted more than $55 billion in cumulative inflows.
A key part of the ETF ecosystem involves authorized participants (APs), typically large financial institutions, market makers, or broker-dealers responsible for creating and redeeming ETF shares. When investor demand pushes the ETF’s market price above its net asset value, APs can create new shares and sell them to investors, helping close the pricing gap.
However, the mechanics of this process can involve selling ETF shares before the underlying bitcoin is purchased. In practice, APs may short ETF shares first and then acquire the necessary bitcoin hours later or by the next business day. Unlike most investors, who must borrow shares before short selling, APs are allowed to short ETF shares almost immediately under regulatory rules.
Because of this timing difference, ETF demand can rise even while the spot market has yet to see the corresponding bitcoin purchases. By the time those purchases occur, they may coincide with other selling pressure, limiting the upward impact on price and leaving bitcoin trading in a narrow range.
According to analysts at Bitfinex, this dynamic likely explains why strong ETF inflows have recently been accompanied by muted price action.
“The result is that the ETF grows, but the actual BTC price doesn’t rise because there has been no buying in the spot market,” the analysts noted, adding that this can make bitcoin appear temporarily “stuck” or suppressed.
They also emphasized that such discrepancies usually have limited long-term effects. However, during periods of market stress or sharp dislocations, the gap between ETF demand and actual spot purchases can briefly create pricing inefficiencies in the market.
