Bitcoin ETFs Record Strongest Inflows Since July, Push Holdings to New High

In brief

Bitcoin ETPs saw a net inflow of 20,685 BTC last week, driven mostly by U.S. ETFs.
The recent uptick in investor risk appetite is driven by rate cut expectations and new crypto IPOs.
Despite institutional demand outpacing new Bitcoin supply, realized and implied volatility remain historically low.

Bitcoin exchange-traded products globally logged net inflows of 20,685 BTC last week, the strongest weekly intake since July 22, according to digital assets firm K33 Research.

The renewed momentum lifted U.S. spot bitcoin ETFs’ combined holdings to 1.32 million BTC, surpassing the previous peak set on July 30.

U.S. Bitcoin ETF products contributed nearly 97% of last week’s 20,685 BTC ETP inflows, highlighting the surge in demand ahead of the FOMC meeting.

Bitcoin ETF inflows “tend to be one of the key determinants of Bitcoin’s performance,” André Dragosch, head of research for Europe at Bitwise Investments, told Decrypt, adding that the “percentage share of Bitcoin’s performance explained by changes in ETP flows” has reached a new all-time high.

Compared with Ethereum ETF flows, “there appears to be a ‘re-rotation’ from Ethereum back to Bitcoin in terms of investor flows,” Dragosch said, citing their data. “Over the past week, flows into Bitcoin ETFs have surpassed new supply growth by a factor of 8.93 times, a key tailwind for Bitcoin’s recent performance.”

Analysts at K33 agree, writing that flows have been a key driver of bitcoin’s strength since ETF approvals earlier last year, and the latest surge signals an acceleration in demand that could underpin further price support.

In the last 30 days, investors accumulated roughly 22,853 BTC via various products, outpacing the new supply of 14,056 BTC. This rising risk appetite for Bitcoin has supported the recent recovery, Bitwise noted in its Monday report.

Fidelity’s FBTC product accounted for a substantial portion of last week’s Bitcoin ETF demand, with its $843 million net inflow representing 36% of the total $2.34 billion recorded across all funds and marking an 18-month high.

While the soft inflation data and rate cut expectations are key drivers, according to Bitwise analysts, the rise in risk appetite was also “underscored by a flurry of major crypto-related IPOs and announcements last week.”

“Still, activity remains tepid and volatility is historically low,” K33 analysts wrote in an investor note on Tuesday.

They pointed to Bitcoin’s seven-day volatility, which hit yearly lows of less than 0.7% last week before rising “modestly” as prices rose above $115,000.

It marks 11 consecutive days of below 1.3% seven-day volatility, the “second-longest such stretch this year,” K33 analysts wrote.

Bitcoin’s implied volatility, which measures the future market expectations using options data, also remains near a multi-year low.

“With muted trading activity, high offshore leverage, and no major immediate catalysts beyond Wednesday’s FOMC, directional signals are mixed,” they said.