Bitcoin is experiencing major correction despite high net spot ETF inflows. Crypto analyst Willy Woo has shared his take on the recent BTC price drop. In his recent post on X, he provides some insights into the current Bitcoin sell-off and why its price does not correlate with positive BTC ETF dynamics.

Who is selling?

Woo points out that while ETFs and institutions are actively buying BTC, focusing solely on ETF flows is flawed. The primary sellers, according to Woo, are the "OGs" — original BTC holders. These early adopters possess significantly more BTC than all ETFs combined, and they tend to sell during every bull market.

The chart reveals a recognizable pattern that shows up during bull runs every cycle.

Paper is everything

The introduction of paper BTC through futures markets since 2017 has significantly altered market dynamics. Paper BTC allows traders to buy synthetic BTC without holding actual BTC, which diverts direct demand away from real BTC.

In the past, Bitcoin’s price surged because only long-time holders and miners sold BTC. However, the 2022 bear market was influenced by a flood of paper BTC, despite minimal selling by spot holders. Woo notes that current conditions show periods where an increase in paper BTC does not lead to a price rally, highlighting the impact of synthetic BTC.

Woo argues that understanding BTC’s market dynamics requires analyzing on-chain data, derivatives data and technical price action.

Thus, focusing solely on ETF buying is insufficient; a broader view is necessary to capture the full demand and supply picture.