Key Insights:
- The positive flow for Bitcoin ETPs has created tailwinds for Bitcoin price.
- Bitwise head researcher says Bitcoin ETP flows are now a major determinant of the flagship asset price performance.
- Bitcoin ETPs are responsible for significant trading volume, impacting miners as onchain BTC flow declines.
Bitwise Europe head of research André Dragosch has identified exchange-traded products (ETPs) as the major driver for Bitcoin performance. In a post on X, Dragosch explained that the flow of these ETPs now determines Bitcoin price trajectory.
According to the crypto expert, the US Securities and Exchange Commission’s (SEC) approved 11 Bitcoin exchange-traded funds (ETFs) in January 2024. Finally allowed institutional investors to access Bitcoin, which has changed how the price reacts.
He explained that onchain metrics no longer have much influence on BTC price. The available data shows a strong correlation between daily net flows for Bitcoin ETFs and the price direction.
He said:
“Since early 2024 and the US ETF approvals, daily net flows have shown a significantly stronger correlation with subsequent returns, underscoring the extent to which institutionalized demand via ETPs now shapes price discovery.”
Interestingly, the expert added that the impact of Bitcoin ETPs is also evident in trading activity. The ETPs’ trading volume is now significant enough to compare with onchain transaction activity.
While onchain transaction volume remains bigger on average, global Bitcoin ETP trades have been compared on some occasions, such as in January 2024, when the US Bitcoin ETFs initially launched.
Interestingly, recent data backs up Dragosch’s analysis. Bitcoin’s resurgence, which has seen the flagship asset climb above $110,000 and consolidate around $114,000, coincides with the return to positive net flow on September 8 after two consecutive outflows.
Bitcoin ETPs Could Be Behind Drop in Network Activity
Meanwhile, the Bitwise researcher further noted that the arrival of Bitcoin ETPs might explain why the Bitcoin network has struggled with low fees despite the flagship asset reaching new peaks. He says this is happening because the ETPs have diverted trading activity to regulated off-chain vehicles.
This singular move has reduced congestion on the Bitcoin network, leading to stabilization of fees. Dragosch compared ETPs to a quasi-layer two solution in this sense, noting that “they internalize transaction demand while still anchoring exposure to the underlying asset.”
While the low fees might be a positive sign for Bitcoin network users, it has also attracted concerns. Alphractal CEO Joao Wedson noted that BTC onchain volume remains far from 2022 levels, adding that miners rely on the onchain activity to survive.
Wedson explained that there is a sign of instability in the Bitcoin mining sector using the Mining Equilibrium Index (MEI). It measures mining profitability relative to historical averages. The metric is currently at 1.06, which means above average but far below the 2.5 levels in 2021 and 2017.
ETP Demand is Driving Bitcoin Price Up
While miners’ future remains very vague, Bitcoin price itself might continue its upward trend as long as demand from ETP remains. This is what the data shared by Dragosch highlights, with a supply-demand imbalance that is more pronounced in 2025.
The data shows that ETP inflows have consistently exceeded Bitcoin’s new supply through mining, particularly since the halving incident. The demand from Bitcoin treasury companies is also a major contributor to this.
The result of this imbalance is that Bitcoin has enjoyed a tailwind, driving BTC prices and reinforcing the role of ETP flows in determining the asset price. The correlation between Bitcoin performance and ETP flows has reached an all-time high in the past six months.
Moses K is a crypto journalist covering markets, regulation, and blockchain trends. He has written for The Coin Republic, Coinchapter, Cryptopolitan, Cryptotale, Coinspeaker, and MPost. Known for his concise, data-driven reporting, Moses focuses on price analysis, on-chain metrics, and policy developments shaping the global digital asset landscape.
