Bitcoin will face a sell-side liquidity crisis that can be sold in 6 months

In a recent thread on X, CryptoQuant founder Ki Young Joo expressed concern about the risk of capital inspection flooding into the space Bitcoin ETFs, and warned of potential sell-side liquidity problems within six months if this trend continues.

Ju's comments came as Bitcoin ETF inflows surpassed the $10 billion inflow mark for the first time.

Risks of sell-side liquidity crisis

Ju emphasized, “The bears cannot win this game until the BTC EFF income stops. In the past week alone, Spot Bitcoin ETFs have seen a net inflow of more than 30,000 BTC, with major players such as exchanges and miners totaling nearly three million BTC, with 1.5 million BTC held by entities in the US.

Bears can't win this game until #Bitcoin ETF inflow stops.

Last week, spot ETFs saw net flows of +30K BTC. Known entities such as exchanges and miners hold 3M BTC, including 1.5M BTC in US entities.

At this rate, we will see a sell-side financial crisis within 6 months. pic.twitter.com/qwAbZJwSOL

— Ki Young Ju (@ki_young_ju) March 12, 2024

According to the latest BitMEX survey data, spot Bitcoin ETFs have surpassed $10 billion in revenue for the first time since their launch in January. This increase in revenue has raised concerns among market watchers that a sell-side crisis may occur in the future.

Ju further predicted that once there is demand for a Bitcoin ETF from the spot, the impact on the price of BTC may be greater than market expectations. He emphasized that the sell-side liquidity crisis could lead to cyclical overestimation due to limited sell-side liquidity and thin order book.

#Bitcoin is currently in a price discovery phase.

Once a sell-side liquidity crisis occurs, the next cyclical peak will be higher than we expect due to limited sell-side liquidity and a thin order book.

This can happen once stored addresses reach a total of 3M BTC. pic.twitter.com/HgwGbHR8fL

— Ki Young Ju (@ki_young_ju) March 12, 2024

Highlighting the ongoing trends, Ju saw a rise in BTC held by “accumulating addresses” – wallets identified only by incoming transactions. However, he stated that the storage address must reach 3M BTC for the crisis to occur.

Bitcoin ETF earnings increase

Recent findings show that there is a significant increase in capital directed at Bitcoin ETF products in the US market.

Specifically, as of March 11, there were $505 million in net flows into these products, with BlackRock leading the way with daily flows of $562 million. VanEck's HODL production also saw significant growth, as outflows rose to $118 million on the same day.

The increase in inflows into VanEck's HODL product can be attributed to the campaign announced by the company. VanEyck has launched a fee waiver campaign that will run from March 12 to March 31, 2025. During this period, product fees are waived until assets reach $1.5 billion, after which a 0.20% fee is imposed.