Institutional interest in U.S. spot Bitcoin exchange-traded funds (ETFs) has surged, with inflows reaching hundreds of millions of dollars daily. Data from Oct. 30, provided by UK investment firm Farside Investors, recorded nearly $900 million in ETF inflows that day alone, marking the second-highest on record.
Yet, for seasoned market observers, this influx has raised concerns. During Bitcoin’s previous bull run to its all-time highs, institutional interest in ETFs was similarly high. However, this enthusiasm ultimately led to a lengthy BTC price consolidation rather than further gains.
“The last few times ETF flows reached around $900 million with BTC prices above $70,000, it marked a local top. Just something to keep in mind,” analyst Mark Cullen remarked.
Historically, large ETF inflows have coincided with BTC price stagnation or even pullbacks. But some analysts remain optimistic, suggesting that the current environment could buck the trend.
“With another massive day of inflows into Bitcoin ETFs but limited price movement, we’re hoping that this ETF-driven FOMO won’t signal a new top this close to an all-time high,” Cullen added.
Increased OTC Bitcoin Availability Bolsters ETF Demand
Unlike previous peaks, the current availability of Bitcoin on over-the-counter (OTC) desks has grown, creating an outlet for ETF demand. On-chain analytics platform CryptoQuant points out that this abundance helps ETFs make large acquisitions without pushing up the spot price.
“Higher Bitcoin availability on OTC desks allows ETFs to purchase daily without significantly impacting spot price,” CryptoQuant noted in its recent weekly report.
Today’s ETF purchases account for only 1% to 2% of the total BTC held on OTC desks, a stark contrast to the 9%–12% of inventory seen in early 2024.
Still, CryptoQuant cautioned that demand would need to continue climbing to affect the current status quo. “OTC desks are no longer growing their Bitcoin balance at the same rate as in mid-2024,” it observed, pointing out that the 30-day change in OTC Bitcoin balance has slowed significantly.
BTC Price Discovery Expected Soon
BTC/USD hovered near $72,000 as of Oct. 31, according to TradingView, suggesting that Bitcoin is inching closer to price discovery territory in U.S. dollar terms. Bitcoin has already hit new all-time highs in various global currencies, such as the euro, fueling speculation about its next U.S. dollar milestone.
“All the institutional investors who got in through ETFs are now in profit and can start rallying more interest from others who just saw gold enter price discovery,” noted Reflexivity co-founder William Clemente on X.
Clemente referenced the iShares Bitcoin Trust (IBIT), BlackRock’s flagship ETF product, which recorded $875 million in net inflows on Oct. 30. Bloomberg’s ETF analyst Eric Balchunas also highlighted that the combined holdings of ETF providers are on track to surpass 1 million BTC soon.
In a record-setting timeline, IBIT has amassed $30 billion in assets under management within just 293 days—an unprecedented achievement for an ETF product.
For more news, find me on Twitter Giannis Andreou and subscribe to My channels Youtube and Rumble
What is your opinion on this particular topic? Leave us your comment below! We are always interested in your opinion!
