Bitcoin Spot ETFs record second highest inflow day with $887 million

Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.

Since the Ethereum US spot Exchange Traded Funds’ (ETFs) 19b-4 filings being approved, Bitcoin has been ranging, with last week’s volatility falling below 1%. This is the lowest since February according to a report by K33 Research. On Tuesday, however, Bitcoin’s ETF inflows showcased that demand is not slowing for the $1.4 trillion asset as it re-approaches its all time-high. 

Tuesday’s inflows totalled nearly $887 million. This was also the sixteenth day of consecutive inflows and the second highest day recorded, still shy of 12 March’s record of $1.045 billion. Since then, BlackRock’s IBIT has taken the lead from the shrinking Grayscale fund, with the latter now holding 285,000 Bitcoin. IBIT now holds over 291,000 Bitcoin and has breached the $20 billion mark for the first time since its launch. According to Bloomberg ETF analyst, Eric Balchunas, over the past four weeks, the Bitcoin ETFs have had the third highest inflows of all ETFs with $3.3 billion combined. They fell short of only Vanguard’s “VOO” and State Street’s “SPY,” both S&P 500 indexes, with flows exceeding $8 billion.  

The success of the US Bitcoin spot ETFs have made many speculate what kind of inflows Ethereum’s versions could attract. Until recently, the performance of Ethereum has been disappointing to say the least. Even following its near 20% increase on 20 May, it has still trailed Bitcoin’s performance. Since its bear market low of around $880 in June 2022, it has increased by 330%. Bitcoin has risen around 360% since its November 2022 low of $15,500. As a result, the Ethereum to Bitcoin price ratio has not had a new high in 30 months. It has also failed to break back above the 0.06 level so far this year. However, will this change when the gates open for Ethereum’s ETF with floods of capital potentially flowing through? 

K33 Research’s report suggests it might. They estimate that over 1 million Ethereum could be absorbed by the ETFs within the first five months. This assumption is based on Bitcoin’s ETF net inflows of $14.8 billion being benchmarked against two elements. The first being Ethereum’s global market share of assets under management held in Exchange Traded Products (ETPs) being 28% of Bitcoin’s, when excluding US Bitcoin spot ETFs. Additionally, Ethereum’s Chicago Mercantile Exchange (CME) futures open interest being 23% of Bitcoin’s. These give a range of $3.4 billion to $4.1 billion of inflows. At current prices, the higher estimate represents 0.9% of Ethereum’s 120 million circulating supply. Comparatively, so far Bitcoin ETFs have net absorbed around 1.1% of Bitcoin’s 19.7 million circulating supply.  

Compared to Bitcoin, Ethereum does have strong tailwinds with the incoming ETFs potentially causing over $4 billion of additional buying pressure. Conversely, Bitcoin faces the looming Mt.Gox redistributions of 141,000 Bitcoin, currently worth $10 billion. Estimates suggest that these Bitcoins will be returned to their owners before the 31 October deadline. However, it is unlikely that all these funds will be sold, with K33 estimating around 30%, or about $3 billion. 

Fortunately for both assets, they will likely experience demand from the FTX estate’s cash redistribution later this year. The question is: how much of the $16.3 billion of cash redistributed will make its way back into the market? Whatever the amount, it will further fuel the next phase of this bull run.