Bitcoin (BTC) exchange-traded funds (ETFs) in the United States yesterday recorded net inflows of more than $1.38 billion, the highest figure since they were launched on the market in January 2024.
Donald Trump's victory in the US elections and the 25 basis point cut in interest rates announced by the US Federal Reserve (Fed) boosted institutional investment in these financial instruments.
According to data from SosoValue, BlackRock's iShares Bitcoin Trust (IBIT) had cash inflows of over $1.12 billion.
Meanwhile, Fidelity's Fidelity Wise Origin Bitcoin Fund (FBTC) reported revenues of $190 million, while Grayscale's Grayscale Bitcoin Mini Trust (BTC) had positive capital flows of more than $20 million.
One step below is the ARK 21Shares Bitcoin ETF (ARKB) from Ark & 21Shares which saw inflows of $17 million, followed by the Bitwise Bitcoin ETF (BITB) which reported inflows of $13 million.
Grayscale’s Grayscale Bitcoin Trust (GBTC), meanwhile, saw inflows of $7 million. Meanwhile, VanEck and Valkyrie ETFs reported inflows of $4 million and $2 million, respectively.
It is also worth noting that the remaining four funds had no inflows or outflows of money during the last day.
Since their launch, the 12 Bitcoin ETFs have facilitated institutional investment and have already recorded inflows of more than $25 billion.
Money inflows and outflows into Bitcoin ETFs since launch. Source: SosoValue.
The good performance of these financial instruments has kept the price of BTC above $76,000. At the time of publication of this note, its price is $76,163.96. Because of the way they work, the performance of ETFs has a direct impact on the price of BTC. The companies that manage these instruments must buy and hold bitcoin in their treasuries to support their actions.
If there is demand for these financial products, firms must go to the market to buy more BTC. By simple law of supply and demand, this causes the price of the digital currency to rise.
For Jeff Mei, COO of cryptocurrency exchange BTSE, Donald Trump’s victory in the US presidential election and the rate cut by the US Federal Reserve (Fed) “encouraged institutions to jump into digital asset markets.” He further said:
“With more rate cuts on the way, the prospect of pro-crypto regulations and continued stimulus from China, it makes sense that institutions are flocking to Blackrock’s bitcoin ETF, and we expect even more to follow in the coming months.”
Jeff Mei, COO of cryptocurrency exchange BTSE.
In addition to Trump's victory, another catalyst that boosted interest in BTC and cryptocurrencies was the interest rate cut announced by Fed Chairman Jerome Powell.
When interest rates drop, the cost of borrowing is lower, and that is why companies and investors move their holdings towards assets considered risky such as BTC and cryptocurrencies , with the aim of obtaining greater profits.
In these contexts, it is also important to note that the yield on Treasury bonds, known to be the safest investment in the world, is falling.
