ETF Inflows Fail to Boost Bitcoin Above $80,000 as Profitable Supply Looms

Despite strong inflows into US spot Bitcoin ETFs, the price of BTC remains below $80,000. Over the past three weeks, a total of $3.8 billion has flowed into these ETFs, with BlackRock's IBIT accounting for $691.5 million of last week's $986.9 million in net inflows. This influx of capital represents 'genuine spot demand' rather than speculation-driven leverage, according to Dominick John, a Zeus Research analyst.

The strong demand from ETFs has not yet translated into a sustained breakout for the price of BTC. Bitcoin trades in a much larger market, where ETF creations are only one source of marginal demand. As a result, the current price action is less contradictory than expected.

According to Glassnode data, approximately 600,000 more Bitcoin are sitting in profit around current levels compared to when the cryptocurrency traded in a similar area in May. This represents roughly $47 billion of potentially profitable supply. Additionally, about 1.05 million BTC are concentrated between $83,000 and $86,000, where long-term holders approaching breakeven may become willing sellers.

The price of Bitcoin dropped below $79,000 after the US employment report revealed a strong jobs market in August, with 162,000 new jobs added and unemployment holding at 4.1%. This unexpected data raised the probability of a September Federal Reserve rate increase to about 60%, making investors less willing to chase risk-sensitive assets like Bitcoin.