Bitcoin ETF Party “Just Getting Started” as Inflows Go Parabolic

Bitcoin exchange-traded funds (ETFs) have seen an explosion of interest over the past week, with net inflows dwarfing early demand. An astounding $2.2 billion has flowed into the 10 US spot bitcoin ETFs over just the last 4 trading days alone, handily surpassing the $2 billion amassed over the funds’ first 4 weeks of existence.

TLDR

  • Bitcoin ETFs have seen over $2.2 billion in inflows in just the last 4 days, more than the first 4 weeks of trading combined ($2.3 billion vs $2 billion)
  • 4 spot Bitcoin ETFs have now crossed $1 billion in assets under management, with Bitwise being the latest
  • BlackRock’s iShares Bitcoin Trust brought in a record $493 million in inflows on Tuesday, now at nearly $5.2 billion in assets
  • Total net inflows for all 10 US spot Bitcoin ETFs was $631 million on Tuesday, second only to the first day of trading
  • Galaxy Digital executive believes more flows are to come due to upcoming Bitcoin halving and narratives matching access/fundamentals

Leading the way is BlackRock’s $5.2 billion iShares Bitcoin Trust (IBIT), which brought in a staggering $493 million on Tuesday – breaking its previous one-day record set shortly after launch.

Yet IBIT is far from the only ETF turning heads. Bitwise’s fund recently crossed the coveted $1 billion mark, entering an elite “billionaire club” currently occupied only by IBIT, Fidelity’s Wise Origin Bitcoin Fund, and Cathie Wood’s ARK ETF.

The net inflows paint an undeniably bullish picture, especially when considering 70% of all ETFs never achieve IBIT’s scale.

What’s more, Tuesday’s $631 million of total net flows ranked as the second-highest daily amount thus far, suggesting no slowdown in momentum.

Drivers of the accelerating interest appear twofold.

Firstly, familiarity and comfort amongst both institutional and retail investors seem to be hitting an inflection point. Major backers like Fidelity and BlackRock have lent the asset class an air of legitimacy it formerly lacked. This warming receptivity can only expand as additional players like pension funds, family offices, and wirehouses begin allocating client capital towards bitcoin.

Secondly, the widening embrace coincides with strengthening on-chain and macro fundamentals. Bitcoin’s upcoming “halving” promises to constrict supply amidst rising inflationary fears, acting as a 1-2 bullish punch. ETF proponents also highlight easing access to the asset class as a longer-term tailwind. For instance, restrictions at brokerages like Vanguard still inhibit many investors from participating.

As Bitwise CIO Matt Hougan predicts, another wave of inflows may soon emerge as mainstream wealth managers and national account platforms come aboard.

For now, the floodgates have already burst open wider than many imagined. Yet if past halvings are any indicator, the ETF party may have only just begun.

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