Bitcoin ETF Witnessing Record Inflows, Analysts Say Momentum Far From Over
Bitcoin ETFs are witnessing a surge in inflows, with analysts suggesting that the momentum is far from over. Several factors, including strong institutional demand, favorable market conditions, and growing confidence in Bitcoin as an asset class, are likely to drive further growth in fund inflows.
Last week, Bitcoin ETFs recorded a net inflow of $2 billion, making it the third-largest inflow in history. Leading the pack was the iShares Bitcoin ETF (IBIT), which brought in $1 billion, followed by the Fidelity Bitcoin ETF (FBTC), which saw inflows of $319 million. Ethereum also saw gains, with its spot ETF attracting $79 million.
“Funds have been flowing in continuously for six days now, which is a strong signal of institutional interest,” said Ryan Lee, Chief Analyst at Bitget Research. He explained, “The main drivers are the increasing likelihood of Trump winning the election and the technical rebound in Bitcoin prices.”
QCP Capital responded to these viewpoints, sharpening the focus on Bitcoin ETFs. Last week alone, there was a $203 million inflow into Bitcoin ETFs on Friday. The company attributed this growth in part to the recent approval of Bitcoin ETF options by the U.S. Securities and Exchange Commission (SEC), which is expected to bring additional liquidity to the market. QCP Capital wrote, “With the approval of ETF options by the SEC, we believe this will provide the necessary liquidity for ETFs to attract sustainable fund inflows.”
One of the main catalysts for the ongoing inflows is the so-called “Trump trade.” Data from cryptocurrency prediction market Polymarket shows that Donald Trump is currently leading with a 61.4% chance of winning, while Vice President Kamala Harris has a 39% chance. Trump’s potential reelection has been positively evaluated by market participants due to his government’s favorable stance on cryptocurrencies. “It is well known that Trump is a supporter of Bitcoin, and his chances of winning are increasing, which is seen as a positive signal for the market,” said Lee. Trump’s comments at the Nashville Bitcoin Conference, urging people not to sell Bitcoin, further fueled investors’ optimism.
Lee also pointed out that Bitcoin recently rebounded from a support level of $58,000, creating technical momentum for a price bounce and attracting more funds into the asset. Vijay Pravin Maharajan, CEO and Founder of bitsCrunch, echoed this sentiment, stating that market sentiment is becoming increasingly favorable. The rapid rise of the cryptocurrency fear and greed index from 38 to 72 within a few weeks is evidence of strong interest in risk assets, including Bitcoin. Maharajan also highlighted geopolitical developments, such as potential easing of tensions in the Middle East, which could further enhance positive market sentiment. He predicted that Bitcoin could break its previous all-time high of $73,850 as early as November and surpass $100,000 in the near future.
Meanwhile, Bernstein Research reinforced the view that Bitcoin ETF inflows will continue to grow, noting that there were $2 billion in new purchases last week, bringing the total inflows for the year to $20.5 billion. With assets under management exceeding $63 billion, Bernstein analysts believe that these inflows are increasingly driving spot market demand for Bitcoin as asset management companies focus on distributing these products to wealth advisors and telecommunications companies. “The incremental inflows into ETFs are now leading to spot demand,” said Bernstein. This shift from initial demand driven by hedge funds and arbitrage traders is expected to contribute to a more stable and sustained flow into Bitcoin ETFs.
However, analysts at Bitfinex cautioned that while the surge in inflows is part of a broader trend of increasing institutional adoption of Bitcoin and expectations of a better regulatory environment after the upcoming U.S. elections, caution should be exercised. “We remain cautious, noting that inflows do not always result in sustained price increases. Bitcoin previously attempted to break the $70,000 level accompanied by significant ETF inflows, but failed. The historical volatility of Bitcoin prices suggests that while inflows enhance confidence in Bitcoin ETFs as viable investment tools, further volatility may occur,” said the Bitfinex analysts.
Editor:
Stacy Elliott
