U.S. Bitcoin ETFs See Inflows After Prolonged Outflows. Is Institutional Interest Rising?

In a notable shift in the Bitcoin market, U.S.-listed Bitcoin spot exchange-traded funds (ETFs) recorded over $28 million in inflows, marking a positive turn after an extended period of outflows. This recent trend may suggest renewed investor interest in Bitcoin despite the volatility seen over the past few weeks, although some major funds are still grappling with outflows.

U.S. Bitcoin ETFs Break Losing Streak with $28 Million in Inflows

According to data from SoSoValue, U.S.-based Bitcoin ETFs saw a total of $28.72 million in net inflows on September 9, 2024. This inflow comes after a streak of significant outflows that began on August 27. The largest U.S. Bitcoin ETFs recorded cumulative outflows of $1.2 billion between August 30 and September 6, the highest outflow since their launch in January 2024.

This positive shift follows a period of severe volatility for Bitcoin, which fell from around $64,000 on August 26 to a low of $53,491 by September 7, a decline of over 16% in less than two weeks. However, Bitcoin has since rebounded, climbing to $57,077—a 3.10% increase from the previous day. Trading volume has also surged, with CoinMarketCap reporting a 45.83% increase in 24-hour trading volume to $33.822 billion.

Mixed Sentiment Among Major Bitcoin ETFs

While the overall market has seen positive net inflows, not all funds have fared well. Data from Farside Investors shows that BlackRock’s IBIT spot Bitcoin ETF experienced net outflows of $9.1 million on September 9. This marks the third significant outflow for IBIT this year, with previous outflows of $37 million on May 1 and $13.5 million on August 29.

Similarly, Grayscale’s Bitcoin spot ETF (GBTC) reported outflows of $22.9 million on September 9. Grayscale has experienced a massive reduction in assets under management, with its Bitcoin holdings dropping from 620,000 BTC to 222,700 BTC. This represents a staggering 60% loss since its transition from a trust to an ETF.

Despite these setbacks for BlackRock and Grayscale, other major ETFs saw positive net inflows. Fidelity, Bitwise, ARK 21Shares, and Invesco Galaxy Bitcoin ETFs recorded inflows of $28.6 million, $22.0 million, $6.8 million, and $3.1 million, respectively.

Bitcoin Price Volatility and ETF Performance

Bitcoin’s price has been notably volatile in recent weeks, with significant movements impacting ETF inflows and outflows. The drop to $53,491, coupled with market uncertainty, led to substantial outflows. However, the cryptocurrency’s rebound above $57,000, along with increased trading volume, may signal that investor confidence is gradually returning.

Historically, September has been a weak month for Bitcoin, but the recent uptick could indicate a shift in market sentiment, possibly driven by institutional investors seeking to buy during the dip.

The Role of Investment Advisors in Bitcoin ETF Adoption

Bitwise’s Chief Information Officer, Matt Hougan, has defended the role of investment advisors in the adoption of spot Bitcoin ETFs. In response to a post by Bianco Research’s Jim Bianco, Hougan argued that investment advisors have played a significant role in driving inflows into Bitcoin ETFs. He noted that investment advisors contributed $1.4 billion to BlackRock’s IBIT ETF, making it the second-fastest growing ETF launched this year.

Jim is wrong here: Investment advisors are adopting bitcoin ETFs faster than any new ETF in history.

Let's look at his own data, focused on IBIT, the BlackRock ETF.

Per his table, IBIT has attracted $1.45 billion in net flows from investment advisors. He calls this "small"… https://t.co/0Sis9lIWDp

— Matt Hougan (@Matt_Hougan) September 9, 2024

While Hougan acknowledged that investment advisors represent a smaller share of Bitcoin ETF buyers, he emphasized that their contributions are significant compared to historical trends. According to Hougan, the broader inflows from other investors have overshadowed the contributions of investment advisors, but their adoption of Bitcoin ETFs remains strong relative to other types of ETFs.

Looking Ahead: What’s Next for Bitcoin ETFs?

While the recent inflows are a positive sign for Bitcoin ETFs, the mixed performance across major funds suggests that the market remains divided. Some funds, like Fidelity and Bitwise, are seeing renewed investor interest, while others, such as BlackRock’s IBIT and Grayscale’s GBTC, continue to struggle with outflows.

As Bitcoin’s price stabilizes and trading volume increases, the next few weeks will be crucial in determining whether the inflows represent a sustained recovery or a temporary response to recent price movements. Institutional interest, particularly from investment advisors, may play a key role in shaping the future of Bitcoin ETFs.

Conclusion

The recent inflows into U.S. Bitcoin ETFs mark a welcome change after weeks of outflows, signaling that investor confidence in Bitcoin may be returning. However, with major funds like BlackRock and Grayscale still experiencing outflows, it’s clear that the market remains divided. As Bitcoin’s price volatility continues to impact ETF performance, the future of Bitcoin ETFs will likely depend on how well the market can navigate these fluctuations and whether institutional investors, particularly investment advisors, continue to play an active role in their adoption.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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