Simply put
- Last week, Bitcoin ETP recorded a net influx of 20,685 BTC, primarily driven by US ETFs.
- Investor risk appetite seems to be rising, fueled by expectations surrounding rate cuts and new crypto IPOs.
- Even though institutional demand for Bitcoin is outstripping the new supply, both realized and implied volatility remain at historical lows.
According to K33 Research, Bitcoin exchange-traded products saw a net inflow of 20,685 BTC last week.
This increase brought the total holdings of US spot Bitcoin ETFs to 1.32 million BTC, exceeding the previous high recorded on July 30th.
US Bitcoin ETF products contributed nearly 97% of last week’s 20,685 BTC influx, reflecting a notable surge in demand ahead of the FOMC meeting.
André Dragosch, head of research for Bitwise Investments in Europe, noted that the flow into Bitcoin ETFs is a crucial factor for Bitcoin’s market performance. He pointed out that the link between ETF flows and Bitcoin’s performance is currently at an all-time high.
Dragosch also remarked that investor flows appear to be shifting back to Bitcoin from Ethereum. He shared that during the past week, flows into Bitcoin ETFs have outpaced the new supply growth by a substantial margin of 8.93 times, which he considers a key driver behind Bitcoin’s recent performance.
Analysts at K33 emphasized that flows have been instrumental in Bitcoin’s stability since ETF approvals last year. The recent uptick in demand indicates a potential for further price support.
In the last 30 days, investors accumulated approximately 22,853 BTC across various products, which exceeded the new supply of 14,056 BTC. This trend suggests a growing risk appetite for Bitcoin, supporting its recent recovery, as noted by Bitwise.
Fidelity’s FBTC products played a significant role in Bitcoin ETF demand last week, bringing in $843 million, which represents 36% of the total $2.34 billion from all funds and marks an 18-month high.
Bitwise analysts attributed this rise to soft inflation data and anticipated rate reductions, also pointing out that major crypto-related IPO announcements last week fueled the increased risk appetite.
Nonetheless, K33 noted that market activity remains somewhat subdued, with volatility at historically low levels.
The seven-day volatility of Bitcoin reached an annual low of under 0.7% last week as prices climbed above $115,000.
K33 analysts highlighted that there have been 11 days with a volatility rate of less than 1.3%, marking one of the longest stretches of this kind observed this year.
Furthermore, the implied volatility of Bitcoin, derived from options data that gauges future market expectations, remains near multi-year lows.
They suggested that the signals from the market are mixed due to the absence of significant immediate catalysts, aside from steady trading activity, high offshore leverage, and the upcoming FOMC meeting.
