On-chain data analyst Murphy said this market cycle looks structurally different from previous ones because spot Bitcoin ETFs have brought a large amount of traditional institutional capital into the market. He argued that ETF net flow data does not directly reflect simple secondary-market buying or selling. Instead, it records the outcome of creations and redemptions by authorized participants, or APs, in the primary market. According to Murphy, only when sustained pressure in the secondary market pushes an ETF’s price away from its net asset value by more than the cost of arbitrage will that pressure show up as a net inflow or outflow in the data. Using Glassnode data, he contrasted two periods: January to February, which showed high trading volume with only modest net outflows, and May to July, which showed low trading volume with much larger net outflows. In his view, the later phase says less about stronger selling pressure and more about missing marginal buyers, which kept ETFs trading at a discount and translated into AP redemptions. He said that may represent a second round of institutional capitulation, often seen near the tail end of a market clearing phase, though current data does not show how long it could last.
According to ChainCatcher, on-chain data analyst Murphy said the current cycle differs sharply from past ones because spot Bitcoin ETFs have brought a large amount of traditional institutional capital into the market.
He said ETF net flow data essentially records the result of creations and redemptions carried out by authorized participants, or APs, in the primary market. In his view, only when sustained buying or selling pressure in the secondary market pushes an ETF’s price away from net asset value by more than the arbitrage cost threshold does that pressure appear in the data as a net inflow or net outflow.
How Murphy reads the ETF flow data
Drawing on Glassnode data, Murphy said the market showed “high trading volume plus modest net outflows” from January to February. He said that pattern suggests panic selling was evident at the time, but there was still substantial buying demand to absorb it.
From May to July, by contrast, the market showed “low trading volume plus large net outflows.” Murphy said the more important signal in that stretch was not a clear increase in selling pressure, but the absence of marginal buyers. That, he said, left ETFs trading at a persistent discount and led to AP redemptions.
His view on the current phase
Murphy said this stage may be more consistent with a second round of institutional “capitulation,” which is usually seen near the tail end of a market-clearing phase. He also said the setup may offer retail investors a new entry point, though current data still does not provide a clear answer on how long that phase may continue.
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