U.S. spot Bitcoin exchange-traded funds (ETFs) recorded their largest single-day inflows in more than 120 days on October 14th.
More than $500 million was poured into the fund, sending Bitcoin (BTC) price above $67,800, its highest level in more than three months.
ETF Store President Nate Geraci explained The event was a landmark day for the Spot BTC ETF, which noted that it has seen net inflows approaching $20 billion over the past 10 months.
“Absolutely ridiculous and blows away all pre-launch demand forecasts. This is not 'Degen Retail' $$$ in my personal opinion. “Advisers and institutional investors continue to slowly adopt it,” he wrote.
The Fidelity Wise Origin Bitcoin Fund led the way with $239.3 million in inflows, the highest level since June 4th. This was followed by the Bitwise Bitcoin ETF with over $100 million and BlackRock's iShares Bitcoin Trust with $79.6 million.
Similarly, the Ark 21Shares Bitcoin ETF received just under $70 million in inflows, and the Grayscale Bitcoin Trust recorded its first October inflow of $37.8 million, its highest amount since early May .
Factors causing the rise in Bitcoin ETF prices
The recent surge in Bitcoin ETF inflows is believed to be due to a combination of factors, creating what some experts are calling a “perfect storm” for crypto investing overall.
For example, Chris Alria, head of crypto exchange Bybit, pointed to the upcoming US elections as a major factor, adding: BTC’s bullish trend will resume. Both sides of the U.S. election have made positive statements regarding cryptocurrencies, and clarification of regulations is expected. ”
Similarly, Alicia Kao, managing director of cryptocurrency exchange KuCoin, told Cointelegraph that rising macroeconomic optimism is another key factor driving this trend.
In her view, economic data released by various U.S. institutions Concerns about a potential recession easedthe Federal Reserve has already begun to gradually lower interest rates.
Daily Bitcoin ETF inflows for October 14th. Source: CoinGlass
He further pointed out that hedge fund participation in digital assets has been steadily increasing due to increased regulatory transparency and the launch of global spot crypto ETFs.
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“Nearly half (47%) of traditional hedge funds currently have exposure to digital assets, a notable increase from 29% in 2023 and 37% in 2022. 67% plan to maintain their current exposure to digital assets,” while 33% intend to increase their investments in digital assets by the end of 2024, demonstrating growing confidence among institutions and This has contributed to significant inflows into the Coin ETF,” Kao said.
Adoption by institutional investors drives demand for ETFs
While retail demand is undoubtedly a key factor, the role of institutional investors in driving this record inflow cannot be overstated.
Mithil Thakore, CEO and co-founder of Bitcoin trading protocol Velar, believes that institutional investors are in the driver's seat and account for much of the BTC currently being collected through ETFs. He added:
“BTC inflows are currently approaching $20 billion, and it took gold more than four years to reach this number. No wonder the demand for Bitcoin is so strong.”
Similarly, Ben Caselin, chief market officer at VALR, attributes the recent surge in inflows to the US Spot Bitcoin ETF to Bitcoin's resilience in both low and high interest rate environments. There is.
Additionally, he believes institutional investors are increasingly gaining access to the space, which is driving capital inflows.
“Participation from financial advisors, pension funds and others will be critical for Bitcoin to reach new price highs and potentially surpass gold as the prominent asset class representing decoupling from traditional markets. ''Keislin said.
Kao said Bitcoin ETF adoption by institutional investors increased significantly by 27% in the second quarter of 2024, with 262 new companies entering the US spot Bitcoin ETF market.
He pointed out that by June 30, 2024, the total number of specialized companies holding Bitcoin ETFs has reached more than 1,000 companies. Despite these impressive numbers, Kao notes that “individual investors remain the main holders of Bitcoin ETFs. Institutional investors manage only 21.15% of total assets under management, and by 2024 This is a slight increase from 18.7% in the quarter.
Comparison of Bitcoin ETFs and traditional assets
The success of Bitcoin ETFs has been nothing short of amazing, especially when compared to traditional asset classes such as gold. Eric Balchunas, senior ETF analyst at Bloomberg, noted that since the BTC fund's launch in January, the asset has hit all-time highs five times.
sauce: Eric Balchunas
Although gold has set new all-time highs 30 times this year, net inflows to gold ETFs have only been $1.4 billion, compared to more than $20 billion in net inflows to Bitcoin ETFs.
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Caselin believes that while gold has a millennia-old history as a legitimate store of value, the modern digital age has brought Bitcoin and all of its unique benefits to investors.
“Bitcoin’s 15-year evolution as a technology-driven asset is in line with modern financial trends and is positioned to attract capital more quickly than traditional assets such as gold.”
Meanwhile, Alian believes that BTC has established itself as a completely new alternative asset class, distinctly different from precious metals, but with many of the same characteristics.
Tristan Dickinson, chief marketing officer of Bitcoin docking layer exSat Network, said Bitcoin ETFs have already proven to be the most successful ETFs in U.S. history, crypto or otherwise, and gold ETFs. He said that they are progressing at a much faster pace. He attributed this rise to Bitcoin's unique characteristics, solid early performance, high volatility, and great potential for short-term profits.
