Bitcoin ETFs acquire more than mining supplies amid record $1.05b inflow

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On March 12, Bitcoin spot Exchange-Traded Funds (ETFs) witnessed a record-setting total net inflow of $1.05 billion.

This marked the highest single-day net inflow since the initiation of the ETF, demonstrating a substantial increase of approximately 56% from the $673 million recorded on Feb. 28. Interestingly, one reason behind the significant inflow into Bitcoin ETFs could be their consistent performance, which has outpaced the newly mined supply of Bitcoin.

Clive Thompson, a former managing director of wealth management with a background in Swiss Private Banking, highlighted in a LinkedIn post that on March 11, the new Bitcoin ETFs acquired roughly 7200 Bitcoins. The figure starkly contrasts with the average daily mined supply of 900 Bitcoins. Thompson pointed out that this imbalance between demand and new supply led to a 5% increase in Bitcoin prices.

He highlighted the role of Genesis Holdings in the market dynamics. Following its bankruptcy, Genesis Holdings began liquidating its GBTC shares, indirectly influencing Bitcoin sales. These sales, which commenced on Feb. 28, appeared to conclude around March 13, according to Thompson. He suggested that the completion of Genesis’s GBTC share sales could have significant implications for Bitcoin’s price trajectory, anticipating a potential surge to new highs, which in turn could see more inflows into Bitcoin ETFs. sought further insights from Clive Thompson on the matter.

Meanwhile, Eric Balchunas, a senior ETF analyst, provided insights on the remarkable trading volumes within the Bitcoin ETF market. On March 12, Balchunas pointed out, the market experienced its second-highest trading volume day for the ten spot Bitcoin ETFs, marking the best day in the past five weeks with a total volume of $8.5 billion.

The volume surpassed that of all but five stocks. Specifically, BlackRock’s spot Bitcoin ETF, IBIT, saw an extraordinary level of activity, doubling the trading volume of SPDR Gold Shares ETF (GLD). Furthermore, other ETFs like VanEck’s HODL and Invesco Galaxy’s BTCO witnessed substantial trading volumes of $150 million and $250 million, respectively, which were significant achievements for these funds.

The success of IBIT has spurred further interest in Bitcoin ETFs, with BlackRock, under Larry Fink’s leadership, seeking regulatory approval to expand its cryptocurrency offerings. This includes proposals for additional spot Bitcoin ETFs and inclusion in its Global Allocation Fund, alongside efforts to extend its reach to emerging markets in Latin America through the launch of the iShares Bitcoin Trust ETF’s Depositary Receipts in Brazil.

However, the journey for new cryptocurrency ETFs, including those for Ethereum (ETH), faces regulatory challenges. The SEC’s hesitation to approve or deny these filings until May has sparked speculation among experts regarding the likelihood of approval.

The absence of dialogue between the SEC and ETF issuers such as BlackRock has been identified as a key factor contributing to this uncertainty. Despite this, there is anticipation for upcoming meetings that could potentially influence the SEC’s stance on these innovative financial products.

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