Demand for Bitcoin on the rise: spot ETFs see record inflows
Yesterday, the price of Bitcoin scratched the USD 77,000 mark for the first time. As a result, the US Bitcoin spot ETFs recorded record inflows: USD 13.374 billion - around 18,000 BTC - were absorbed by the investment products on yesterday's trading day.
The best day so far was March 12, 2024, with inflows of USD 1.045 billion (14,700 BTC).
IBIT, BlackRock's Bitcoin ETF, topped the list - as it often does. The now largest exchange-traded Bitcoin fund accounted for USD 1.120 billion in inflows yesterday - also a record. With yesterday's strong trading day, the Bitcoin spot ETFs also reached a new all-time high in terms of cumulative inflows since admission: in less than ten months, the investment products have soaked up more than USD 25.5 billion.
The strong demand that Bitcoin spot ETFs have seen in just a few months makes the trading start of gold spot ETFs 20 years ago look old. Gold ETFs took several years to reach the USD 25 billion mark in cumulative inflows.
With the strong inflows in recent weeks, BlackRock's IBIT has now overtaken BlackRock's gold ETF in terms of fund size.
However, while IBIT is the largest Bitcoin ETF, BlackRock's gold ETF, with assets under management of around USD 33 billion, lags well behind the largest gold ETF, which manages around USD 76 billion.
Demand is picking up speed
When the price of Bitcoin rose significantly in response to the election victory of crypto-friendly US President Donald Trump, the trading volume of Bitcoin spot ETFs skyrocketed. For BlackRock's IBIT, November 6 was the best day ever in this respect.
The investment products approved in January are still very popular almost ten months after the record launch. But there is still room for improvement: The more investor-friendly "in-kind method", which allows ETF shares to be exchanged directly for Bitcoin, has not yet been approved. In addition, no options have been allowed to be traded on the basis of the investment products, which could attract even more capital. However, with the "pro-Bitcoin shift" in US politics, it can be assumed that regulation will soon become much friendlier.
Another factor putting the brakes on is the fact that Vanguard, the world's second-largest asset manager after BlackRock, does not offer the securities for trading on its own platform. ETF expert Nate Geraci drew attention to this once again in the context of the latest record figures.
A record $1.4bil into spot btc ETFs today...
- Nate Geraci (@NateGeraci) November 8, 2024
Now $25.5bil net inflows since January launch.
Continue to rewrite ETF history books.
And remember, these still aren't fully available on most large wirehouse platforms (or at all on Vanguard).
The Bitcoin spot ETFs enable institutional investors to invest in the asset for the first time via the structures they are familiar with. Filings with the US Securities and Exchange Commission have shown that even state pension funds, among others, have already invested.
Nevertheless, demand is still dominated by private investors. And they seem to be just getting warmed up, as a glance at the general Google search interest in Bitcoin suggests.
It remains to be seen how demand for investment products, which is strongly linked to the price of Bitcoin, will develop in the coming weeks and months. In view of the interest rate cuts by the US Federal Reserve, which could further fuel the propensity to invest, as well as the prospect of a US Bitcoin reserve, this is likely to be just a foretaste of what is to come.
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