Inflows into spot Bitcoin exchange-traded funds (ETFs) in the last four days surpassed $2.2 billion, outpacing the amount of inflows the 10 funds saw in the first four weeks.
Leading the pack are four spot Bitcoin ETFs from BlackRock, Fidelity, 21 Shares and Bitwise, which have all crossed the $1 billion mark in assets under management (AUM) from fresh inflows. Grayscale Investments’ GBTC, continues to clock daily outflows, although they have steadily decreased since the fund was converted into an ETF.
On Tuesday alone, Bitcoin ETFs saw $631 million worth of net inflows – more than twelve times the amount of Bitcoin the blockchain produced. The surge in demand resulted in Bitcoin price topping $52,500 on Wednesday, ending the last seven days with a 17% gain.
“Currently the ETF inflows lead to a 2% increase in price per day, which is about $1000 per day. Most of the increase is taking place during the settlement period before US market opening,” wrote long-time Bitcoin investor Marc van der Chijs on X.
Van der Chijs, who founded First Block Capital and Hut 8 Mining, believes that assessing ETF inflows before the U.S. market opens makes it possible to predict the daily uptick in Bitcoin’s price.
I spent some time analyzing the post-ETF Bitcoin charts today and came up with some rough price predictions for the next 3 months. Currently the ETF inflows lead to a 2% increase in price per day, which is about $1000 per day. Most of the increase is taking place during the…
— Marc van der Chijs (@marcvanderchijs) February 15, 2024
“At current prices inflows are 10-12 times of newly created BTC, meaning that people have to sell their BTC in order to fill the ETF orders. They will only do that at higher prices, because hardly anybody who looks at this market would think BTC is peaking,” he said.
He also noted two other events that could shape Bitcoin’s price trajectory over the next three months: the halving and the caps on when some financial advisors can sell a new ETF.
The halving, which cuts the BTC rewards paid out to miners by 50%, would mean that only 450 new coins per day will be produced after April, as opposed to the 900 coins per day currently.
The supply shock from the halving, coupled with the fact that many financial advisors can only start selling a new ETF after 90 days of trading, could mean demand picks up even more significantly by mid-year.
Other industry watchers, like Gemini’s Cameron Winklevoss, hold similar views. “If these inflows hold through the Halvening, then Bitcoin ETFs will be taking 20x more off the market than the daily mint,” said Winklevoss on X.
Much like an IPO, the Bitcoin ETFs have opened up access to bitcoin to the vast capital markets for the first time.
A new chapter of price discovery is starting — and we may discover Bitcoin has been widely undervalued.
Going to be an exciting year.
— Hunter Horsley (@HHorsley) February 15, 2024
Meanwhile, options data shows that traders are betting on Bitcoin hitting a new all-time high this year. A report from Bloomberg Intelligence earlier this week shows a heightened demand for out-of-money calls with strike prices of $60,000, $65,000, and $75,000.
So far, it appears that most of this price action has been solely driven by institutional investors.
Ark Invest’s Director of Digital Assets noted that Google search volumes relative to Bitcoin’s price are at all-time lows, despite the cryptocurrency breaching the $50,000 mark.
For context, the last time Bitcoin was trading at this level Google search trends for Bitcoin were above 90, and currently, they are below 20, implying that retail interest is fairly low. The bigger picture for Bitcoin could be vastly different when this situation changes.
The most bullish set-up in #bitcoin history looks like:
– Retail still asleep
– Rates still high
– Halving imminent
– Pro-BTC US Presidential candidates
– Blackrock smash buying 10k / day
– Paper BTC cleared outThis. Time. Is. Different.
— Julian Fahrer (@Julian__Fahrer) February 15, 2024